New Delhi: The central government is taking steps to help the Reserve Bank of India (RBI) in reversing the economic slowdown that India is facing.
Speaking to news agency IANS, NITI Aayog Vice Chairman Rajiv Kumar said that the Centre is taking policy measures.
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“The RBI Governor has himself said that there are several indications of a slowdown in the economy. That is why the central bank has taken the step of further reducing the repo rate,” he said and added, “So, I think that the RBI having acted, the government will also take steps because it has been recognised that there is a slowdown.”
Earlier this month, the RBI slashed the repo rate for the fourth time, lowering it to 5.4 percent to spur growth by providing cheaper loans. Besides, it has reduced the GDP growth rate for 2019-20 to 6.9 percent, as compared to the earlier estimate of 7 percent.
The economic growth has been slipping quarter after quarter with January-March period GDP growth slowing to 5.8 per cent in FY19. With most macro indicators showing demand weakness, the growth is expected to have further declined in April-June period. Financial services firm Nomura expect the GDP to moderate to 5.7 per cent in the June quarter.
Numerous suggestions have been made to curb the decline in economic activity that has caused distress across various sectors. Moreover, the industry has demanded sops and relief package from the government to tide over the crisis.
“The Budget has already announced recapitalisation of banks and the money has been allocated. It will give more firepower to extend credit,” Kumar said.
Earlier, the Prime Minister’s Economic Advisory Council Chairman Bibek Debroy said that the government needs to form a ‘GST Council-like’ body to strategise expenditure and have maximum impact on the growth of economy.
Debroy had said that with “all that is happening in the external world, even the 6 per cent is not dismal. It’s not enough, we need to grow faster.”
However, the slow credit growth may throw a challenge to Prime Minister Narendra Modi’s plans to make India a $5 trillion economy in the next five years.