Unprecedented financial sector crisis in 70 years, says NITI Aayog


PTI, Aug 23, 2019, 10:06 AM IST

New Delhi: Government think tank NITI Aayog on Thursday described the current stress in the financial sector as “unprecedented in the last 70 years”, saying nobody is trusting anyone else in the sector. It made a case for extraordinary steps to deal with the crisis that has resulted in an economic slowdown.

NITI Aayog Vice-Chairman Rajiv Kumar also said there was no business of the government to hold back payments to companies. It is being sorted out, he said at an event in New Delhi on Thursday.

“Nobody is trusting anybody else… within the private sector nobody is ready to lend, everyone is sitting on cash… you may have to take steps that are extraordinary,” Kumar said.

He said the government needed to take steps, which eliminate apprehension from the minds of private sector players and encourage them to step up investments.

He also said private investments will drive India out of the middle income trap.

Elaborating further, Kumar said some of the steps have already been announced in the Union Budget to address stress in the financial sector and give a push to economic growth which hit a five-year low of 6.8 per cent in 2018-19.

Explaining how stress in the financial sector led to a slowdown in the economy, the NITI Aayog vice-chairman said the entire episode started with indiscriminate lending during 2009-14, leading to an increase in non-performing assets (NPAs) after 2014.

Rising NPAs reduced the ability of banks to do fresh lending, he said, adding the space was occupied by shadow banks with a credit growth of 25 per cent.

The non-banking finance companies (NBFCs) could not manage this high loan growth leading to defaults by some of the large entities triggering slowdown in the economy eventually.

“The whole nature of the game has changed after demonetisation, the goods and services tax and the Insolvency and Bankruptcy Code. Earlier, you had 35 per cent cash sloshing around, while it has now become much less. All these put together, it is a fairly complex situation. There is no easy answer,” he said.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

Maharashtra Polls: Eknath Shinde targets Uddhav for `giving up’ Bal Thackeray’s principles for power

Will appear before Lokayukta for questioning in MUDA case, says CM Siddaramaiah

Lies have short life, Cong’s ‘fake’ narrative smashed: Fadnavis

Temple idols found desecrated in Hyderabad, case registered

SC junks plea against quashing of LOC issued to ex-house help of Sushant Singh Rajput

JPC chairman Jagdambika Pal to visit K’taka on Nov 7 to meet farmers protesting Waqf notices

Indian boxer Mandeep Jangra wins WBF’s world title

Related Articles More

Heroin worth Rs 3.5 crore recovered in police raid in Delhi, 2 arrested

Treated Muslims like fuel for ‘lantern’: Prashant Kishor targets Lalu, asks upper castes to stay away from Nitish

Wayanad Bypoll: Politics in country, Kerala not genuinely working for people, says Priyanka Gandhi

Malegaon blast trial: Court issues bailable warrant against Pragya Thakur

Maharashtra Polls: Eknath Shinde targets Uddhav for `giving up’ Bal Thackeray’s principles for power

MUST WATCH

Gho Pooja in Deepavali Festival

Melukote Deepavali

Ganapathi Co-operative Society Ltd

Udayavani Chinnara Banna 2024

Annapoorna Aahar | Food Places In Mysore


Latest Additions

Heroin worth Rs 3.5 crore recovered in police raid in Delhi, 2 arrested

Govt clerk found dead in Tahsildar’s chamber, FIR filed against minister’s PA, 2 others

Treated Muslims like fuel for ‘lantern’: Prashant Kishor targets Lalu, asks upper castes to stay away from Nitish

MP Brijesh Chowta urges Kerala CM for strict action against attack on Edneer Swamiji’s vehicle

Mangaluru: Asiatic male lion arrives at Pilikula Zoo

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.