position, they are also guided by the viability of the projects to be funded. risk aversion stemming from stress in financial assets has been one of the reasons for restrained bank credit growth in recent times. have borrowers been meeting their obligations? 17. i have raised the issue of borrowers ’ obligations on many occasions and at the cost of repeating myself, i would like to emphasise the point once more. while the quest to grow is understandable, the borrowers cannot exclusively rely on bank funds to finance this growth, without committing their own funds. the labyrinthine maze through which several large infrastructure projects have been funded point to extremely low or negligible levels of equity contributions leading to extremely high levels of leverage and virtually no skin in the game for the promoters. there is a very visible pattern here. the last few years ’ growth was largely on account of infra projects. these projects were launched by a handful of promoters with thin equity as i alluded to earlier. i suspect that this small group has run out of even such thin level of equity to contribute their fair share for revival of the stalled projects, not to talk about commissioning of new projects. so, it should be obvious to everyone that if momentum has to continue then they have to either find fresh equity on their own or make way for others who can contribute such equity both for the existing projects and also for new ones. 18. it is also pertinent to mention here that the present legal system does not facilitate an easy closure / takeover of unviable firms. in order to overcome such problems and to salvage value in firms in distress, it is imperative to take measures for an early enactment of a bankruptcy code. creation of a central authority for resolution of financial firms in distress also needs an early finalization. 19. high levels of debt accumulation by corporates has been encouraged in part by the availability of low - cost, abundant and flexible debt, facilitated by the search - for - yield environment created by the extraordinary policy measures undertaken in the us, uk, euro area and japan. several corporates have increased leverage, by borrowing in both foreign and domestic currencies. as corporates, you have to be mindful of global uncertainty, which is a given. the interconnectedness of markets lends itself to volatility. the entities with significantly higher unhedged forex borrowings are most likely to face maximum distress. governance reforms 20. india would continue to need external capital for growth and

as producers of tradeable goods and services. the previous great leaps were the absorption into the market economy of only 70 million people from korea, taiwan, h. k. and singapore in the 1970s and 1980s, that is, over a 20 - year period, and the absorption of an additional 30 or a little more million from the european transition economics over the last 10 years. but those leaps implied a very slow rate of absorption, considerably smaller than that of the last few years which has witnessed the absorption into the market economy of large population categories from china and india. the economic growth of the emerging and transition market economies, though a positive world development as it is associated with diminishing income inequalities among countries leading to more balanced world development, has, nonetheless, produced some major shocks as reflected not only in the rising trend in energy and raw material prices but, more importantly, in the increasing pollution of sea and land, global warming due to carbon dioxide emissions, etc. indeed, if we want to prevent a major climatic catastrophe on a global scale, the waste of energy, water and other resources, not only by emerging economies but also by developed economies, will have to be reversed at a great cost in the future. just as under international accounting standards future liabilities, such as companies ’ pension liabilities, are deducted from company incomes, so the future cost of today ’ s actions should be taken into account. accordingly today ’ s global and individual countries ’ gdp growth rates, which supposedly measure the improvement in the standard of living, should be adjusted downwards. such an adjustment is necessary as there is too much complacency and the hidden economic costs of today ’ s actions are not properly taken into account. any new era brings along new problems, requires new solutions and increases the range of potential crises and risks, which are not properly gauged, as they are not yet calibrated. moreover, by projecting today ’ s favourable trends, financial markets often generate a benign perception of future developments, which do not, however, reflect all the underlying forces at work. indeed, the significant transformation of the financial environment has led to heightened and new risks associated with the introduction of innovative products ( e. g. derivatives ), the existence of highly leveraged non - regulated financial institutions and markets, combined with world liquidity increasing considerably faster than the value of the underlying real assets. regarding world politics most probably china and later india will become great world powers but during the transitional period