New Delhi: India’s economic growth is likely to pick up in the second half of this fiscal year as consumer demand is expected to improve, Finance Minister Nirmala Sitharaman said on Thursday. India’s economic growth in April-June fell to a six-year low of 5%. Speaking after an interaction with private banks, Sitharaman said lenders told her that there was enough liquidity and demand for credit.
‘After my meeting with the private sector bank heads, I can say it was like a tonic,’ Ms. Sitharaman said. ‘Not a single bank said that there was a liquidity crunch, and they all said that demand growth was strong in the deep rural areas.’
‘The Finance Minister gave us two hours of patient hearing, and we all conveyed to her that there was no liquidity shortage,’ said V. Vaidyanathan, MD and CEO, IDFC First Bank. ‘Many said that there was strong growth in demand, especially at the lower end of the spectrum, and it was growing in the range of 18-25%.’
The Finance Minister also said that the bankers told her that they felt the slump in demand for commercial vehicles was a cyclical issue, but this was not the case for passenger vehicles. ‘They said that for commercial vehicles, it was a cyclical phenomenon and that it would be resolved in one or two quarters,’ Ms. Sitharaman said. ‘For passenger vehicles, they said it was a matter of sentiment,’ she added.