The growth of Indian economy based on political stability and great inflow of foreign investment influenced the study of rating agency Fitch which conveyed in its global economic outlook report that GDP growth rate in India is expected to increase by 5.6 per cent in the ongoing year and it can further increase, up to 6.5 per cent in the next fiscal year. This forecast by Fitch seems slightly more optimistic than the RBI’S projected figures of 5.5 per cent 6.3 per cent in the respected period.
“Lifting GDP growth to substantially higher levels would require large productivity gains through implementation of reforms related to governance, product and labour markets, as well as reduction of infrastructure bottlenecks.”- Spokesperson, Fitch.
Both consumer price and retail inflations slowed down but food inflation is persistently annoying the large section of society. It was 9.42 percent in August and 9.36 percent in the month of July.” 3 to 4 per cent inflation rate is considered ideal for an economy and inflation rate higher than the growth rate is really a concern for the economy. Hence, this is the sole reason that RBI is still uncomfortable in increasing the bank rate and repo rate. The apex bank can only go to revise the rates unless the government takes tough initiatives for curbing the inflation rate.”- Kislay Pandey, Recovery Matter Advocate, the Supreme Court of India. From the perspective of RBI governor the country must achieve 8 per cent inflation rate in the current fiscal and 6 per cent in the first quarter of next fiscal year.
“In a recent verdict by the Supreme Court of India where it cancelled the allocation of 214 coal blocks, there is an imminent danger of rising power prices apart from the Rs. 1 lakh crore of loss in the form of money lent to coal and energy companies by different state-run banks. This extra pressure to banks further makes the RBI reluctant to increase bank and repo rate. And an immediate action by the Centre government to re-allocate the coal blocks can define the future of power sector and fate of the lending banks.”- Kislay Pandey, Recovery Matter Advocate, the Supreme Court of India.
At this significant juncture of time the apex court clearly mentioned that it is not giving any special dispensation to the banks to recast loans even sounds more riskier to banks if they recast these accounts. Banks are already suffering from bad loans pertaining to issues which are not genuine and uncalculated. This financial load of bad loans on banks evidently increase the capital burden of the government and discrepancies in the budget calculations.