(Harvest) In an unexpected move, the government of India has announced a $32 billion plan to recapitalize the country’s sour-loan laden public sector banks, its biggest step so far in addressing a lingering problem that has weighed on domestic loan growth and retarded a long-awaited investment cycle.
A resumption in credit growth and fixed investment would add some momentum to an economy that began slowing precipitously in early 2016, when it posted roughly 9% annual growth. In the quarter ended in June, India’s economic output expanded at an annual rate of 5.7%.
