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The first part of this series looked at the significant reduction in Non-Performing Assets (NPA) in India’s banking system. While a fall in creation of new NPAs has helped, the write-off of bad loans and recapitalization of government banks using taxpayer’s money has also played a big role in bringing down NPAs. Are write-offs and fiscal recapitalization of banks a closed chapter in India’s bad loan saga in the last decade? There is good reason to argue that the scars of India’s bad loan crisis have also led to subdued investment spending in the economy, which also means weaker tailwinds for current and future economic growth. Here are four charts which explain this argument in detail.
Roshan Kishore is the Data and Political Economy Editor at Hindustan Times. His weekly column for HT Premium Terms of Trade appears every Friday.