Mumbai: Bad loans related to key sectors in the economy contributed to slowing infrastructure growth in the country, NITI Aayog vice-chairman Arvind Panagariya said on Thursday.
“Infrastructure—we are working on it. Fiscal issue is central to this," Panagariya said. “Within resources available, we are moving forward. I do feel sometimes that we lost a little bit of time on the NPAs (non-performing assets) in some of the sectors that could have contributed" to infrastructure growth, he said.
Panagariya was discussing the think thank’s economic reform agenda at the Reserve Bank of India (RBI) on Thursday. RBI governor Urjit Patel and Vivek Dehejia, professor of economics at Carleton University (Canada), were part of the discussion.
Several infrastructure projects such as power plants were set back by difficulties in securing fuel supplies, completing land acquisition and securing statutory approvals, making it difficult for them to repay bank loans.
Panagariya’s comments come at a time the government, RBI, and banks are working on resolving the Rs10 trillion worth of stressed loans that are clogging the Indian banking system.
Following an RBI directive, banks have launched bankruptcy proceedings against four of 12 large borrowers referred to them by the central bank. Most of these borrowers are in the infrastructure sector.
Bad loans have crimped the private sector’s ability to contribute to infrastructure growth, Panagariya said. That has put the onus of capital investment on the government.
Given the efforts to resolve toxic loans has gathered momentum, Panagariya said he was optimistic of a revival in the infrastructure space.
On issues in the labour market, he said he found talk of jobless growth a “little bit bogus" and underlined the need for better collection of data to measure employment trends. “The point that I have to make is that when such growth happens, 7-8%, it cannot be jobless, jobs are being created. Unfortunately, we are not counting them because there are no credible surveys of recent vintage," he said. “Jobs are being created but the problem we have in India is that we suffered incredibly with under-employment."