Clearing dues from the government

The release of pending dues from statal entities can itself be a fiscal stimulus

Topics
Indian Economy | Power Sector | MSME

Vinayak Chatterjee 

Vinayak Chatterjee

Economics textbooks tell us that when you sign a contract with the government to supply goods, perform a service, or lend money, that contract carries no counterparty risk because the government’s “sovereign risk” is believed to be zero — it will always have the money to pay you. The sovereign cannot default! The reality in this country is, of course, quite different.

Across a range of sectors in the economy, companies have found the hard way that governments can delay payments for various reasons. Any company dealing with the government today (central or state) ...

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First Published: Tue, October 06 2020. 23:13 IST
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