If you have turned on the television any day over the past few months, between 8 pm and 10 pm, and tuned into a news channel, you would have definitely noticed five to six talking heads, all talking (individually or even together) about the ongoing economic slowdown or a related topic. That’s the first thing V Vaidyanathan, CEO, IDFC First Bank observed when he took the stage at Outlook Business Leading Edge 2019. It’s the elephant in the room wherever you go. And India is not alone. Global growth forecasts are anything but upbeat. Some of the brightest nations are stuck in low gear.
“Slowdown is on everyone’s mind these days and people are keen to understand if it’s for real and how long it’s going to last,” he added before sharing his take on the economic downturn. It’s not as black and white as one would think. India saw a lot of slowdown-like situations between 2010 and 2015 — GDP was falling quarter on quarter, fiscal deficit was high near 6% and oil prices were on the boil above $100/barrel. And in the midst of all that, there was also a surge in credit, especially to companies operating in roads, infrastructure and power sectors.
“But the cycle played itself out only after 2015. Hence, when a cure (Insolvency and Bankruptcy Code) was announced, most public sector (PSU) banks, along with a few private banks, had to take on significant losses,” he said. Nea