Mumbai: Chief economic advisor V Anantha Nageswaran on Friday said managing Macroeconomic fundamentals like the balance of payments and current account deficit has assumed a larger priority for the government right now as the West Asia conflict has triggered a massive global energy shock.
Speaking at an event on securitisation, Nageswaran said the West Asia conflict has led to a "energy shock" where the prices have moved north after the supply impact due to issues in the Strait of Hormuz.
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"In the current context of having to deal with the energy price, energy shock, current account deficit (CAD) and the balance of payments (BoP), etc. These, therefore, have assumed a much larger priority, urgency at this point," Nageswaran said.
Refraining from giving any policy prescriptions on the securitisation front, Nageswaran stressed that the financial market has to keep up with the activity in the real sector and reminded that it was the extra focus on derivative products which led to the Global Financial Crisis in 2008.
When asked specifically about the Rs 3 lakh annual income limit leading to qualification as microfinance, Nageswaran said he is against this system of putting numerical thresholds and would rather like the policy to come out with ratios on the same.
Income thresholds when the economy was USD 1 trillion in size cannot be the same when the economy has grown to over USD 4 trillion, and the average incomes have also grown.
On the Priority Sector Lending mandate, Nageswaran said the industry must thank the PSL mandate, as it is leading to higher volumes.
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Priority Sector Lending (PSL) is a Reserve Bank of India (RBI) mandate that requires banks to allocate a specific percentage of their Adjusted Net Bank Credit (ANBC) to underserved economic sectors.
The primary goal behind the PSL mandate is to ensure that credit flows to crucial segments like agriculture and small businesses.
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