rnin     o io     onomi ss es            21.3
              the banks and securitised into a kind of    Government, as per the Economic Survey 2016-
              fund that is sold off to a diverse group    17. If we go by the proposition of the survey, it
              of investors in financial system. In case   looks suitable for the Government to think in
              of India these securitised bad loans can    the direction of setting up a separate body in the
              be run through sector-specific special      line of the PARA. Setting up a bad bank will only
              purpose vehicles (SPVs). As the problem     address the problem of banks’ bad debt and may
              of the NPAs is concentrated in a few        make them fit to restart lending. But this will not
              sectors (like infrastructure and metals),   promote the cause of investment in the economy as
              this model looks quite useful. As the       some big corporates are unfit to borrow (on whom
              process involves the ‘market’ (for the      depends the investment prospects). It means India
              pricing of the securitised bad assets) the  needs to leverage these corporate entities, too. In
              PSBs will attract less blame in this model. the aftermath of the presentation of the Union
              As the balance-sheet of banks become        Budget 2017-18, the Government expressed its
              clean they can start fresh lending.         willingness in the direction of setting up such a
        (iv) Bad-bank spin-off: This is the most          body in the coming months. Meanwhile, business,
              familiar model tried across the world. In   industries and banks in India are waiting for the
              this format, stressed banks shift their bad Government initiative in this regard.
              loans to a separate banking body (i.e.,
              the bad bank). This way the risk of bad        2. DemogrAphic DiviDeND
              loans is smoothly transferred from the
              stressed banks’ balance-sheet to the bad    introDuction
              bank making banks viable to start fresh     India’s turn to enjoy the opportunity of
              lending. Though this format looks the       demographic dividend2 has been repeatedly
              most suitable one for India’s situation, it highlighted by the experts and international
              needs certain arrangements to be put in     organisations alike. At the peak of discussion, it
              place, such as setting up a separate body,  was covered thoroughly by the Economic Survey
              putting desired kind of management          2012-13 devoting an exclusive chapter to it. As
              skill in place, information systems and     India’s dependency ratio is declining fast, India will
              proper regulatory mechanism being the       soon reach the peak of enjoying the demographic
              major ones. This is an expensive model,     dividend—the highest economic contribution
              too. The idea of a public sector asset      from the peak of working age (WA) population. It
              rehabilitation agency (PARA) suggested      should be kept in mind that demography provides
              by the Economic Survey 2016-17 falls        potential opportunity and is not destiny (as the
              in this category. However, the PARA is      Economic Survey 2016-17 and 2015-16 remind).
              supposed to address another problem         India needs to optimise the period to fill the
              also—the stressed balance-sheet of some     great many economic gaps it has been fighting
              private sector corporate entities.          against since decades. Recent studies point out
                                                          that India is in different situation today—from
     conclusion
                                                          waiting to happening of the opportunity of the
     The situation of the bad loans in the banking        demographic dividend. And soon India will see
     system has reached such a level that it has started
     hitting the investment prospects in the economy,        2.  The write-up is based on the analyses presented in the
                                                                 Economic Survey 2016-17; 2015-16 and 2012-13.
     and they need immediate attention from the