No Need to Panic, Govt Taking Bold Steps on Economy: NITI Aayog VC

Rajiv Kumar, vice chairman of the NITI Aayog, called for extraordinary steps to tackle the situation.

NITI Aayog Vice Chairman Rajiv Kumar had said that this kind of liquidity crunch has not been witnessed in the economy in the past 70 years.

(Photo: ANI)

A day after NITI Aayog Vice Chairman Rajiv Kumar sounded the alarm on the liquidity crunch in the economy, he, on Friday, 23 August, requested the media to "stop misinterpreting" his statement and said there is "no need to panic."

Clarifying his remark, Kumar said, "The cassendras should now accept that the government is well on top of the situation and will do all it can to revive the 'animal spirits' in the economy."

The NITI Aayog vice chairman, on Thursday, termed the ongoing situation in the financial sector an unprecedented scenario and called for extraordinary steps to tackle the situation.

Kumar said that this kind of liquidity crunch has not been witnessed since the past 70 years, where the entire financial sector is in a churn and no one trusts anyone else. 

He added that the government is considering a number of measures that will be taken at an appropriate time to deal with the financial stress and unleash animal spirits in the economy.

"With the private sector, nobody wants to lend to anyone else. Everyone is sitting up on cash," Kumar was quoted by news agency ANI as saying.

“The government must do whatever it can to remove apprehensions of the private sector.”

Rajiv Kumar, Vice Chairman, NITI Aayog

He further said that after demonetisation, GST and the Insolvency and Bankruptcy Code, the nature of the game has changed. He said that earlier, there used to be a 10, 20, 30, 35 percent cash sloshing around, which used to help people.

"That has become much less now," he said.

(With inputs from ANI and PTI)