The ship is not sinking

Abstract

RBI continues to be cautious yet optimistic in a sluggish growth environment The Reserve Bank of India (RBI) recently released the Financial Stability Report (FSR), which discusses the subdued but persistent risks both globally and domestically. FSR observes that concerted action by the authorities globally, since 2008, has been helpful in dousing the inferno. The distilled wisdom that the financial sector exists only to aid the real sector, minted on red hot embers over the last five years, should now guide policies of the central banks, including RBI. FSR states that global growth continues to be slow and multi-paced in different regions of the world. The domestic economy has been sluggish in recent years due to supply bottlenecks, policy uncertainty, dampened investment and slackening external demand. Foreign institutional investors have turned net sellers and resources raised in equity markets have remained low. And the corporate bond market in India, another viable mode of financing corporates, has not developed despite persistent effort of more than two decades. The corporate sector remains stressed as reflected in lower growth in sales and profits, and unhedged exposures might increase the vulnerabilities in view of the weakening rupee. Domestic savings as a percentage of GDP at 30.8%, down from 36.8% in 2007-08, have impacted the investible resources. Export credit continues to contract and the ratio of short-term debt to total debt has also been rising while current account deficit (CAD) has been widening. Read more at: https://www.financialexpress.com/archive/the-ship-is-not-sinking/1136761/