Data released on Tuesday suggested that the government has continued to increase credit and liquidity in the system to tackle an economic slowdown, distributing loans of Rs 4.91 lakh crore across two months, and issuing income tax refunds of Rs 1.46 lakh crore till the end of November.
State-owned banks loaned Rs 2.39 lakh crore to individual and corporate customers, including small companies, in November, continuing the customer outreach initiative announced by finance minister Nirmala Sitharaman for the festive season, which saw them loan Rs 2.52 lakh crore in October, the finance ministry said in a statement.
The income tax department has also issued refunds to the tune of Rs 1.46 lakh crore till November 28, a 23% increase over the corresponding period a year ago, senior finance ministry officials said, adding that the magnitude of the refunds and the growth indicates the streamlining of the refunds process.
The government continued to increase credit and liquidity to tackle an economic slowdown
Industry and retail consumers have borrowed a total of Rs 4,91,834 crore in just two months, the statement showed. Of this, home loans account for Rs 27,254 crore, vehicle loans, Rs 11,088 crore. Also, education loans Rs 1,111 crore, and agricultural loans, Rs 78,374 crore.
The loans push is part of the government’s efforts to revive demand in a slowing economy. Data released on Friday showed that the economy expanded by 4.5% in the second quarter (ending September 30) of 2019-2020, the lowest rate of growth since March 2013. However, finance ministry officials said at the time that the economy has bottomed out. The economy grew by 5% in the three months ended June. Over the past few months, the government has announced a series of measures to address the slowing economy. These include a cut in the corporate tax rate, especially for new manufacturing units; a real estate fund; and easier access to credit. The loans push is part of the last.
Other experts said they would like to wait and see whether the credit push continues. “Relying on two months’ numbers for credit outreach may not be right.” However, he said a consultant with a multinational financial advisory who asked not to be named.
