Know About India's 'Good' Problems

India's corporate and banking sectors have come a long way.

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In 2016-17, the Economic Survey highlighted a twin-balance sheet problem for India's economy. There was a crisis in the balance sheets of corporates and banks. Public sector banks unveiled stressed assets that unleashed a slowdown before the Great Pandemic hit the economy.

Cut to the present day, and you will notice that corporate and bank balance sheets are more robust than ever. The latest analysis by ICRA, a credit rating agency, shows that the Insolvency and Bankruptcy Code (IBC) is helping drive a change in the behaviour of borrowers and improving lenders' recovery. That is boosting the balance sheets of banks. Despite tepid credit growth, banks can maintain a strong balance sheet.

Similarly, companies are sitting on record profits as a percentage of gross domestic product. They are utilizing the money to repay debt. Businesses have already increased dividend payouts besides the buyback of shares. Companies either pay shareholders more cash, issue bonus shares, or both. That has enthused investors, and share prices are already near record highs. It is likely to continue to attract investors.