Proposed steps by NITI Ayog to slow economic decline in India
The Indian think-tank, the NITI Ayog has declared that the current economic situation in India is unprecedented and nobody had faced this type of a situation in the past 70 years. The NITI Ayog has also proposed several solutions to sort through the economic mess.
What steps has the NITI Ayog taken?
- The NITI Ayog has recognized the gravity of the economic crisis in front of the country and knows that the entire financial system is under threat.
- The NITI Ayog has declared that the government needs to take certain steps that will eliminate the apprehensions from the private sector and motivate them to enact a greater role in the economy.
- The NITI Ayog believes that the private investments will drive India out of the middle-income trap as government funding is less forthcoming in this regard.
- The NITI Ayog is worried that lending institutions which are currently laden with cash are not willing to lend money to the corporates.
- The rise in NPAs has reduced the ability of banks to perform fresh lending as space is occupied by the shadow banks which have reported a healthy credit growth of 25%.
- However, shadow banks or the non-banking finance companies (NBFCs) can not sustain this high loan growth which has lead to sustained defaults on loan repayment which has triggered a slowdown in the Indian economy.
The successive changes in economic works like demonetization, the imposition of the Goods & Services Tax and the Insolvency & Bankruptcy Code have all added to the cash crunch which is now impacting business in the country.
Category: Economy & Banking Current Affairs