India’s banking sector is in crisis, but the country’s economy is roaring ahead, says a leading economist.
In a paper published by the Council of Economic Advisers (CEA) on Thursday, economists at the bank have found that the banking sector had grown by 9.2 per cent in the past year, and that the economy is growing at a faster pace than expected.
The CEA economists pointed out that while the government had taken a lot of steps to boost banking, the pace of lending had slowed significantly.
They noted that the number of people in the banking system had been on the rise since the middle of the last decade, and in 2017-18 there were 8.7 million people in banking, up from 6.7 per cent at the end of last year.
The report said that the banks in India were also being forced to make loans to small and medium-sized businesses and the government was also tightening its rules for banks.
The economy was growing at 5.7% in 2017, compared with 5.1% in 2016 and 4.7 in 2015.