GDP grew only 3.1% during the January to March quarter, and the Covid-19 worsened the situation.

West Bengal finance minister Amit Mitra on Tuesday said the commercial banks have put `6 lakh crore back in the Reserve Bank of India coffers and were earning at 2.5% reverse repo rate since industries have no borrowing appetite and the banks, too, were cautious of lending.

He said the Centre has offered Rs 3-lakh-crore stimulus for the MSMEs but a fact check through the state-level bankers’ committee meeting shows that banks want to be risk-averse for fear of fresh non-performing assets while there was no demand for loans.

In such a situation, when there is no business and there are no demand for loans, the Rs 20-lakh-crore stimulus package announced by the Centre in the wake of Covid-19 has only 0.05% cash component and the rest would all go through banking channels. Before the Centre announced the additional Rs 40,000 cr for the MGNREGA, the cash component in the entire stimulus was 0.005%. While all the other nations made direct cash transfers in the wake of Covid-19, India is the only nation that has made zero cash transfer.

“A direct cash transfer to the tune of Rs 7,500 crore per month for three months would have triggered a demand. This would have boosted production. But the Centre instead chose to give loans triggering creation of NPAs.”  India’s economy, he said, has nosedived, since for the consequetive seven quarters there has been a drop in GDP growth rate.

GDP grew only 3.1% during the January to March quarter, and the Covid-19 worsened the situation. He said Rs 53,000 crore is due to the West Bengal government from the Centre, of which Rs 36,000 crore is on account of centrally-sponsored and assisted schemes. There has been no GST reimbursement, no food subsidy from the Centre and there has been a decrease of Rs 11,000 crore of direct devolution of funds from the finance commission.