- Subramanian had complained about the NPA crisis in 2014 as the Chief Economic Advisor.
- Said- export, import, and revenue figures are showing a serious state of the economy
- The country’s GDP growth was 4.5% in the July-September quarter, its lowest in 6 years
Former Chief Economic Advisor Arvind Subramanian says that the country’s current economic slowdown is very large (Great slowdown). The economy seems to be moving towards the ICU. The second wave of twin balance sheet (TBS) crises is affecting the economy. Subramanian said this during a paper presentation at Harvard University.
Double damage to the economy because of NPA
Subramanian also warned about the TBS problem in December 2014, when he was the Chief Economic Advisor. TBS refers to the corporate debt being non-performing assets (NPAs), which increases the difficulties for banks. Industrialists are in trouble, so they cannot make a new investment. If the NPAs of banks increase, then they cannot give more loans. This will slow down the economy.
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The former Chief Economic Advisor in a new research paper called TBS-1 from 2004 to 2011, loans for steel, power and infra sectors that turned into NPAs. TBS-2 refers to the cash crisis of non-banking finance companies and real estate firms after demonetization.
According to Subramanian, the IL&FS crisis that surfaced in September last year was an earthquake-like event. Not only because they disclosed the debt of Rs 90,000 crore to IL&FS, but also because it affected the market and raised questions about the entire NBFC sector.
GDP growth stood at 4.5% in the September quarter. This is the lowest in 6 years. Subramanian says that the figures for exports, imports and government revenue also show that the state of the economy is critical.
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