In a 43-minute interview to Karan Thapar for The Wire Nilesh Shah did accept that there are three or four serious challenges that face the economy. First, he said “undoubtedly unemployment is a major concern”, adding that it’s not just increasing jobs that needs to be focussed upon but also income levels.
The second area of concern Nilesh Shah said is the finance sector. Questioned about the RBI’s recent Financial Stability Report which shows NPAs could increase to 13.5% by September 2021 compared to 7.5% a year earlier – and for public sector banks they could increase to 16.2% compared to 9.7% a year earlier – he said “undoubtedly the NPA burden is a cause of concern”. He said “the resolution of NPAs is a real problem” and recommended that the model followed by the US government in handling General Motors should be followed in India. GM was allowed to go bankrupt and then revived over a limited period of time. Nilesh Shah added that even if suspension of the IBC Act was a sensible response eight months ago it now needs to be lifted and the Act brought back into force.