Minsky moment was sometimes seen in the news. Which of the following correctly explains the term? |ForumIAS

[A] It is a plan to establish multiple new startups to weed out inefficient firms

[B] It is the time where the government’s fiscal deficit goes beyond the ability of government to repay them.

[C] It marks the decline of asset prices, causing mass panic and the inability of debtors to pay their interest and principal.

[D] It is a plan to establish a Natrium fast reactor demonstration project collaboration with private and government.

Answer: C

Notes:

Our small and medium scale sector is facing a Minsky moment.

The Minsky moment marks the decline of asset prices, causing mass panic and the inability of debtors to pay their interest and principal.
India has reached its Minsky moment. Several banks and financial institutions have collapsed in the last 18 months in India.
As a result of the above causes, credit growth is at a multi-year low of 5.6%. Banks do not want to risk any more loans on their books.
This will further dampen demand for real estate and automobiles once the pent-up demand is over.

Source: The Hindu

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