A day after the RBI projected economic contraction in 2020-21, finance minister Nirmala Sitharaman on Saturday said future fiscal policy actions to stimulate the economy will depend on how the Covid-19 pandemic pans out.
The government has already announced a Rs 20.97-lakh-crore economic package, which includes the Reserve Bank’s liquidity measures worth Rs 8.01 lakh crore till May 17.
Sitharaman said making a “realistic assessment” of economic growth would be difficult at this point of time as there is no clarity on when the pandemic would retreat.
“I’m not closing the door at all. I want to keep getting inputs from industry, implement what we have announced and depending on how things pan out we have to respond accordingly. We are only two-months old in this year, we have 10 months to go,” Sitharaman said in a conversation with BJP leader Nalin Kohli.
Have no fear
Sitharaman further said banks have been asked to extend loans automatically to eligible borrowers without fear of 3Cs — CBI, CVC and CAG.
She said clear instructions have been given in a meeting with the chiefs of public sector banks and financial institutions on Friday that the banks should not be scared to extend loans as 100 per cent guarantee is being given by the government. In the case of default, the bank or official will not be hauled up.
“Yesterday, I reiterated that by saying, if a decision goes wrong, and if there is a loss, the government has given 100 per cent guarantee now. It is not at all going to be on the individual official and on the bank, and, therefore, without fear they should take this automatic route in the sense, everybody eligible for additional term loan and additional working capital should be given,” she said.
Under the Rs 45000-crore partial credit guarantee scheme, the Centre will bear only the first 20 per cent of the loss as guarantor.
It is being said that genuine bonafide decisions in the banking sector are being impacted because of the worry of undue harassment by 3Cs – the Central Bureau of Investigation (CBI), the Central Vigilance Commission (CVC) and the Comptroller and Audit General (CAG).
