The term ‘balance sheet syndrome with Indian characteristics’ was mentioned in the Mid-Year Economic Analysis 2015, by the Ministry of Finance and was elaborated in Economic Survey 2015. Here, the balance sheet syndrome refers to the worsening profit scenario and mounting losses of private sector specifically corporate. High losses by the corporate discourages future investment and in this way, the economy suffers.
The balance sheet problem of rising debt and losses occurred in many other countries especially in advanced countries in recent years. But in India, unlike in Japan and in the US, the problem has some unique features and hence is a "balance sheet syndrome with Indian characteristics." In Japan, there was a balance sheet problem after the real estate and equity boom of the late 1980s. similarly, in the US there was a balance sheet problem after the global financial crisis.
The economic survey elaborates three reasons to show why this syndrome is distinctively Indian.
First, India is not suffering from recession or stagnation (in Japan and in the US, there is recession).
Second, in India, there is no weak macro-economic demand. Rather, there is moderately strong demand (at least relative to supply) reflected in moderately high inflation and a moderately high current account deficit. On the other hand, in advanced countries like the US and Japan, demand is poor.
Third, perhaps even more distinctly, the Indian balance sheet problem has partly due to private sector investment in infrastructure via the so-called public private partnership (PPP) model. This was because the public sector was reluctant to actively intervene in infrastructure projects.