India’s chief economic advisor Krishnamurthy Subramanian has come out in support of NDA government’s flagship legislation IBC, saying it is a significant reform that is changing credit behaviour in the country, reports Economic Times (ET).
“There is a credit culture which prevails before the code is enacted because the threat of losing the company is not there. After the code is enacted, there is slow but sure movement towards a different credit culture,” said Subramanian in an interview.
“The fact is that we cannot have a super equity, which is when you make profits, you keep all the profits and when you make losses, the banks take a haircut. I think that regime is basically what a lot of cronyism is,” he added.
Acknowledging that the Insolvency and Bankruptcy Code of India (IBC) is still a work-in-progress, he noted, “Things like the bankruptcy code take time to settle down.”
Commenting on the state of Indian economy, Subramanian said that the present government had achieved a commendable 7.5 per cent average growth over the last five years. He, however, noted that there was a slowdown in the previous two quarters.
Earlier in another interview, the CEA had also said that India was moving towards data-based governance and that new proxies were being developed to predict job creation in the economy accurately.