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INDIA-ECONOMY
India seeks to kickstart sagging economy
NEW DELHI, Aug 24, 2019 (BSS/AFP) – India said Friday it would pump in
nearly 10 billion dollars into government banks to ease a liquidity crunch in
Asia’s third-largest economy, as it goes through its worst slowdown in five
years.
“We are releasing 70,000 crore ($9.7 billion) upfront into public sector
banks…. This will benefit all corporate and retail borrowers,” Finance
Minister Nirmala Sitharaman said at a news conference in New Delhi.
She also said she would roll back an extra fee that had been introduced in
the July budget on profits from equity sales that had spooked foreign
investors and sent Indian shares sharply lower.
Sitharaman announced a slew of other steps to revive the misfiring
economy, including an agreement by lenders to pass onto borrowers interest
rate cuts by the central bank.
“People were saying that the benefit of rate reductions don’t reach them
at all, or reaches in trickle. There was an across the board grievance,”
Sitharaman said.
“This will result in reduced EMI (equated monthly installments) for
housing, vehicle, retail and other loans.”
Earlier this month, India’s central bank cut interest rates for the fourth
time this year to a nine-year low in an attempt to boost growth, but credit
has remained tight for firms and consumers.
India’s economic growth has slowed in the past three consecutive quarters,
losing its status as the world’s fastest-growing major economy to China, with
unemployment at its highest since the 1970s.
The automotive sector is particularly stricken, with car sales plunging 31
percent in July, the ninth consecutive monthly drop, prompting manufacturers
to halt production at some plants.
In an effort to boost car sales Sitharaman said the ban on purchasing new
vehicles by government departments would be lifted.
Industry figures had been calling on newly re-elected Prime Minister
Narendra Modi’s government to provide more of a fiscal boost as signs
multiply that numerous sectors are suffering a painful slowdown.
On Thursday shares fell sharply after the government’s chief economic
advisor K. Subramanian indicated he did not favour government sops in a
market-driven economy.
Gross domestic product (GDP) for the world’s sixth-biggest economy grew
5.8 percent in the final quarter of 2018, down from 6.6 percent in the
previous quarter.
Economists at Nomura predicted this week a further slowing of momentum,
forecasting growth of 5.7 percent in the first three months of 2019. GDP data
are due next Friday.
BSS/AFP/HR/0955