Niranjan Hiranandani, co-founder and managing director of Hiranandani Group, has expressed grave concerns over the liquidity crisis faced by the Indian economy in present times and has opined that a good budget can hardly solve the economic crisis.
Speaking to Republic TV's editor in Chief Arnab Goswami, Hiranandani who hails from the real estate industry spoke of what is imperative for his sector. "It's not demand for housing which is low, there is a huge interest for housing. What is lacking is liquidity. You cannot have a system, an economy, whether it is real estate, automobile, or SMEs, all these sectors are devoid of liquidity so even when the demand is coming up the liquidity is lacking", said Hiranandani while emphasizing on the issue of liquidity.
Earlier while speaking with ANI, Hiranandani had said, "I have never seen a liquidity crisis as bad as it is today. No matter how good the budget is, if the oil in the mechanism of the economy is not working, the economy can't move. If the oil comes back and we get a boost of budget then we will see recovery".
Speaking on the context of liquidity, earlier in the day, the Principal Economic Adviser in the Ministry of Finance Sanjeev Sanyal said that Indian banks have gone through a cleaning process and are now in a better condition to lend due to better liquidity. Sanyal asserted that banks now should focus on more lending as the cleaning process is completed and there is better capitalization and regularization in the banking system.
"We have cleaned the banking system from past 5-6 years which has been completed now. Banks are better regulated now and posses better potential to lend loans for businesses, consumers and large investments. There is better liquidity in the system", said Sanyal while speaking to ANI.
A day ahead of the Union budget 2020, Internation Monetary Fund (IMF) Managing Director Kristalina Georgieva said that India has experienced an abrupt slowdown in 2019 due to major reforms such as GST and demonetization however the economy is not in recession and is expected to set on an upward trajectory in 2020 and 2021. The IMF chief also added that the reforms such as GST and Demonetization had a short term impact on the economy but would prove beneficial for the country in the long run.
The government has started presenting the Union Budget 2020-2021 in the Parliament a short while back. The first phase of the session will conclude on February 11, while the second part of the session will begin from March 2 and end on April 3. The budget session started on January 31 with the government presenting the economic survey which gave an overview of how the economy fared in 2019.
The Indian economy gained a lead ahead of the UK and France to gain fifth position in terms of GDP. According to the economic survey 2020, despite a slowdown in the Indian economy, it has managed to stay afloat in the global slowdown, faring better than the BRICS nations such as Brazil, Russia, South Africa and is on par with China.