Credit support helped SMEs to absorb post-demonetisation shock: UN official

Government steps to increase credit support to small enterprises post demonetisation helped the sector contain the shock, said a senior […]

   

Government steps to increase credit support to small enterprises post demonetisation helped the sector contain the shock, said a senior UN official, on Monday, in Washington. “Demonetisation clearly had an impact in early 2017. This resulted in a significant liquidity crunch, but was temporary,” Sebastian Vergara, an Economic Affairs Officer at the UN, told a news agency. “As the year went on, measures were implemented, financial relief were introduced, steps like credit support for small enterprise to help contain the shock that this demonetisation policy created,” the UN offical said, adding that demonetisation has benefited the banking sector and increased the tax base — which will help the fiscal accounts. He said these moves would help the medium-term growth of the economy. He added 2017 has been a year of major economic reforms in India, particularly in the banking sector and these reforms would helping the Indian economy to improve its efficiency and increase the medium-term prospects of its economy. Speaking further on Indian economy’s growth prospect, Vergara said India can achieve an 8 per cent growth rate for the next two decades if it unleashes the next set of reforms that could help it in realising its full potential “It needs to think as to how to maintain and consolidate its growth for a very long period of time. India in our assessment has the potential to grow at eight per cent, not for a few years, but 20 years,” he said. On the reforms front, he said despite the positive economic condition, India’s economic growth could be a little lower in comparison to some of the earlier forecasts.
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One of this is the growth of private consumption and sound macroeconomic policies. The monetary policy, which has been able to control inflation, also has a role to play, he said. On the fiscal side, he suggested, “Also fiscal policy in India, in our assessment has been prudent. At the same time, it has provided another quite support for the economic activity.” The UN officer praised the Indian government’s emphasis on public investment and infrastructure projects. (With PTI Inputs)

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