Consumption demand, going forward, is likely to remain robust on the back of expected normal south-west monsoon and possible implementation of the Seventh Central Pay Commission at the State level, apart from the gathering pace of remonetisation, according to Reserve Bank of India’s latest annual report.

Further, the thrust of the Union Budget on capital expenditure, housing, micro, small and medium enterprises (MSMEs) and farm sector, coupled with other reforms such as the implementation of Goods and Services Tax (GST) from July 2017 and the Real Estate (Regulation and Development) Act (RERA), 2016 is expected to reinvigorate economic activity during 2017-18.

On the inflation front, the central bank cautioned that upside risks may emerge from input costs, wages and imported inflation.

With liquidity and currency levels progressing towards neutral/normal, the resolution of stressed assets and recapitalisation of public sector banks will be critical for improving credit offtake, the RBI said.

Bankruptcy code

According to the report, the corporate insolvency resolution process, liquidation and cross-border insolvency under the Insolvency and Bankruptcy Code (IBC), 2016 and the establishment of the Insolvency and Bankruptcy Board of India (IBBI) will help in reorganisation and resolution of corporates and individuals in a time-bound manner.

By providing an effective legal framework for timely resolution of insolvency and bankruptcy, IBC will support the development of credit and corporate bond markets, strengthen debt recovery, encourage entrepreneurship, improve ease of doing business and facilitate more investments, it added.

The code proposes a paradigm shift from the existing ‘debtor in possession’ to a ‘creditor in control’ regime.

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