Neelkanth Mishra: Capital rush shows plumbing problems

The ratio of bank loans to GDP, a measure of banking penetration, is among the lowest in the world

Neelkanth Mishra 

Neelkanth Mishra Growth in bank loans is at a 50-year low when financial savings are rising: As a percentage of gross domestic product (GDP), they have been rising for the last two years, as seen in healthy deposit growth, strong inflows into small savings schemes and mutual funds, and the weakness in gold imports. Demonetisation only added to that. Combine this with the Union government’s absolute fiscal deficit being where it was six years ago and there is a lot more now left to lend to businesses and individuals. There is of course a demand problem: In a slowing economy with overcapacity in ...

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Neelkanth Mishra: Capital rush shows plumbing problems

The ratio of bank loans to GDP, a measure of banking penetration, is among the lowest in the world

The ratio of bank loans to GDP, a measure of banking penetration, is among the lowest in the world Growth in bank loans is at a 50-year low when financial savings are rising: As a percentage of gross domestic product (GDP), they have been rising for the last two years, as seen in healthy deposit growth, strong inflows into small savings schemes and mutual funds, and the weakness in gold imports. Demonetisation only added to that. Combine this with the Union government’s absolute fiscal deficit being where it was six years ago and there is a lot more now left to lend to businesses and individuals. There is of course a demand problem: In a slowing economy with overcapacity in ... image
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