Page 34 - Nuvama | IC Report 2023

• DE-GLOBALISATION • DEREGULATION • DEBT • DEMOGRAPHY • DEMOCRACY

➦ Aristotle taught that excess of virtue can be a vice, and this
applies to the financial plane as well; absorbed in right quantities,
debt can launch an economy into a higher growth orbit, but
excessive debt is the path to economic stagnation

➦ Global debt levels have surged, and high debt is an impediment
to growth, productivity and stability, and renders monetary
policy ineffective; Japan had a brush with this juncture 30 years
ago, and China may be facing this spectre now
➦ In contrast, India has undertaken painful recognition and
restructuring of bad debt over the last ten years such that
corporate and bank balance sheets have now been repaired;
meanwhile, the household debt to GDP ratio too remains
contained relative to peers

➦ A host of supply-side reforms that facilitate better capital
allocation along with healthy financial and business sector
balance sheets place India in a unique position to kick-start a
virtuous economic cycle
➦ Healthy balance sheets and favourable demography should
help India build a manufacturing base and drive premiumisation
of consumption

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