New Delhi, AUg 23 : Describing the current economic slowdown as an “unprecedented situation”, NITI Aayog Vice Chairman Rajiv Kumar said, “From last 70 years government have not faced this sort of liquidity situation where the entire financial sector is in churn.”
Rajiv Kumar,VC Niti Aayog said,”If Government recognizes problem is in the financial sector… this is unprecedented situation for Government from last 70 years have not faced this sort of liquidity situation where entire financial sector is in churn and nobody is trusting anybody else.”
He also said the government “must do whatever it can to take away some of the apprehensions of the private sector”. His comments have come at a time when the country’s economy is facing the worst pace of growth in nearly five years.
He said the RBI has reduced repo rate four consecutive times this year and also directed the banks to pass rate cut benefits to borrowers. Kumar further said that the government has taken a series of measures to improve the financial health of the NBFC sector.
“Government recognises absolutely that the problem is in the financial sector. Liquidity is turning into insolvency. Therefore you have got to stop that,” he said.Speaking on the liquidity situation, Kumar said: “Nobody is trusting anybody else. It’s not just the government and the private sector, within the private sector, nobody wants to lend to anybody else.”
“There are two issues. One, you may have to take steps which are out of the ordinary… Secondly, I think the government must do whatever it can to take away some of the apprehensions for the private sector,” he added.
India’s GDP or gross domestic product grew 5.8 per cent in the January-March period. For the financial year ended March 31, the economic growth stood at 6.8 per cent.
The Centre issued guidelines on operationalising Rs 1-lakh crore partial guarantee scheme under which public-sector banks can purchase high-rated pooled assets of financially sound non-banking finance companies (NBFCs).