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India’s growth performance ‘very solid’ over past four years: IMF Chief Economist
Dec-10-2018

Praising the fundamental economic reforms like the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC) carried out by the government, International Monetary Fund’s (IMF) Chief Economist Maurice Obstfeld has said that India’s growth performance has been ‘very solid’ over the past four years.

Obstfeld added ‘There are important vulnerabilities, so it is important for the reform momentum to be maintained even as an election comes up and for the path of fiscal adjustment to be maintained’. He said one risk that has become much more evident in the last few years has been non-bank finance, usually called shadow banking. He also said there is a big challenge of stricter, oversight.

Noting that there has long been a legacy of corporate debt associated with bad infrastructure projects in India, he said it has been very concentrated in banking system. He said ‘But as the government is trying to better oversee the banking system, these loans have migrated to shadow banking and that is an area where more needs to be done to contain financial pressures, which we are beginning to see in India’.

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