Will restructuring capital help in addressing India’s corporate debt challenge? Lipton was speaking in the context of the Chinese corporate debt mountain, but Indian policymakers would do well to heed his advice as well. The stock problem (existing debt) is addressed without a matching focus on the underlying flow problem (cash flows of the state electricity boards). This is generally true of all corporate debt challenges. Second, the problem of bad loans has to be dealt with on both fronts—the lenders and borrowers.

Source: Mint June 13, 2016 18:22 UTC