NEW DELHI: Finance Minister Nirmala Sitharaman said the government was looking at several measures to prop up consumption, lack of which is believed by many economists to be behind the country’s growth slowdown.
She said among other things she had asked her ministry and RBI for data on how much money has been lent by PSU banks to investment grade NBFCs, other than the top 50 or finance companies with triple-A rating. “I have been told by Indian Bank’s Association that bankers were willing to on-lend to investment grade NBFCs,” said Sitharaman.
The NBFC crisis where major shadow lenders like IL&FS and Dewan Housing Finance faced repayment defaults saw a rush to take out deposits from such finance firms leading to a crisis in lending by this sector for retail and small business.
She said the government was encouraging ministries and departments to fulfill their spending on welfare measures. Economists believe that spending on rural infrastructure, cash transfers to farmers and schemes such as MGNREGA that guarantee work to able-bodied citizens in rural areas could help transmit money and prop up consumption demand.
India’s growth dipped to just 5 per cent in the first quarter of this financial year.