NITI Aayog Vice Chairperson Rajiv Kumar on Thursday said extraordinary steps were needed to deal with the unprecedented crisis in the financial sector, PTI reported. He said the government needed to encourage the private sector to invest, and eliminate apprehensions about policies in the minds of private players.

“Nobody is trusting anybody else... within the private sector nobody is ready to lend, everyone is sitting on cash...you may have to take steps which are extraordinary,” Kumar said at an event in New Delhi. He added that some steps have already been outlined in the Union Budget to raise Gross Domestic Product from a five-year low of 6.8%.

However, Kumar claimed that the roots of the economic slowdown lay in the indiscriminate lending during the 2009-’14 period leading to a rise in non-performing assets. Non Banking Finance Companies failed to manage the growth of loans, which resulted in defaults, triggering an economic slowdown, the NITI Aayog vice chairperson added.

“The whole nature of the game has changed after demonetisation, the Goods and Services Tax and the Insolvency and Bankruptcy Code,” he said. “The earlier period where you had 35% cash sloshing around, it has become much less now. All of these put together it is a fairly complex situation. There is no easy answer.”

Kumar disagreed with the government holding back payments due to the private sector in lieu of goods and services. “I have no hesitation in saying that there is no business of the government to hold back payments which are due to the private sector,” he said. “At the moment, there is huge effort going on to try and get this sorted out.”

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