Pradip Gayakwad, one of India’s leading economists, called the news “unbelievable” and added “it is a huge mistake to give such a large number of new loans to such a small group of borrowers.”

“The only real solution is to increase the supply of money, which can be done by improving the banking system rather than giving the money to India’s poor,” he said.

India’s official unemployment rate of 5.1 percent is the highest on record. The government has pledged 1 trillion rupees ($22 billion) for infrastructure projects and has targeted 1.3 percent for overall investment in the country this fiscal.

But experts say the government must act more quickly to stem the flow of credit. The average annual growth rate in India’s manufacturing sector has hovered closer to the official rate with a rise to 6.2 percent in 2012, compared with the government’s target of 5 percent for the current fiscal. (Reporting by Shruti Pandey in Bengaluru; Editing by Lisa Shumaker and Clarence Fernandez)

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