Once these banks start showing losses, they will not be able to pay dividends to the government nor pay taxes, which will further aggravate the situation for the government as its return on investment as an investor would be very negligible for the next few years, says M V Subramanian.
There will very little direct impact from the US Fed's rate hike this time, as we are well prepared both to handle liquidity, outflow of FII funds and managing our currency. But that doesn't mean India will be out of the woods anytime soon, says M V Subramanian.
M V Subramanian says there is an imperative need for collective responsibility to tackle inflation, prices and availability of essential commodities, and not rely on inflation targeting alone.
The government should now focus on governance and monitoring the supply side to manage inflation, says M V Subramanian.
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