Highlighting that there was no direct link between demonetisation and the economic slowdown, Niti Aayog Vice Chairman Rajiv Kumar has said that the slowdown in the growth rate in six quarters starting from the last quarter of 2015-16 was due to rising non-performing assets (NPAs) in the banking sector and not because of the note ban drive.
Niti Aayog Vice Chairman further noted that credit disbursal to the industry got stalled on the back of rising NPAs and in the case of the micro, small and medium enterprises (MSME) industry, credit actually shrank. He further said that fall in Gross Domestic Product growth in two quarters immediately after demonetization was just simply in continuation of a declining trend and not because of the shock of demonetization.
Besides, Rajiv Kumar said that following the decline in growth rate, ramping up of capital expenditure was necessary to counter the decline in credit disbursal to industry players, adding that the government is compensating for this by ramping up public capital expenditure and so it has been because of the government there is a rise in the quarterly growth rate since the second quarter of 2017-18.