Niti Aayog Vice-Chairman Rajiv Kumar has said that the government must take extraordinary steps to improve the current financial crisis in India. He said the ongoing crisis in the financial sector of India is unprecedented.
He, however, applauded the government for taking initiatives like demonetisation, Goods and Service Tax, Insolvency and Bankruptcy Code, that has changed the economic situation of the country.
“This is an unprecedented situation for the government of India. In the last 70 years, nobody had faced this sort of situation where the entire financial system is under threat and nobody is trusting anybody else. Within the private sector, nobody is ready to lend, everyone is sitting on cash,” Kumar said while addressing the Hero Mindmine summit.
“It takes a lot of courage to break the inertia…I think the government must do whatever it can to take away some of the apprehension of the private sector,” he added.
He said initiatives such as demonetisation, GST and IBC had changed the rules of the game and that the current liquidity crisis had led to a complex situation.
“The earlier period where you had 35 percent cash sloshing around has become much less now. This entire thing put together is a fairly complex situation. There is no easy answer,” he added.
Kumar said that “the Centre would need to eliminate apprehension from the minds of private sector players to boost investments. This is an unprecedented situation and we are still grappling to find the right modality to get a fix.”