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Raghuram Rajan responsible for India’s declining economy: Niti Aayog VC Rajiv Kumar

By Newsd
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RBI acts as seat belt for Govt; protects it in case of accident: Raghuram Rajan
Source: Livemint

Niti Aayog Vice Chairman blamed former RBI governor Raghuram Rajan for the drastic slowdown of Indian economy. Rajiv Kumar said that “his policies led to industries not receiving credits from banks.”

Days after the GDP growth rate for the first quarter of 2018-19 was pegged at the highest in three years, Rajiv said that, “there was trend of declining growth and why the growth was declining? The growth was declining because of the rising NPA, the non-performing assets in the banking sector. When this government came into office, those figures were about Rs 4 lakh crore. It rose to Rs 10.5 lakh crore by the middle of 2017.”

The NPA rose and the GDP growth rate declined “because under the previous governor (Raghuram) Rajan, they had instituted new mechanisms to identify stressed or non-performing assets and these continuously continued to grow up which is why the banking sector stopped giving credit to the industry,” Rajiv Kumar said.

In June 2018, the Reserve Bank of India (RBI) cautioned in its Financial Stability Report that things would worsen before they become better. And to everybody’s shock, Punjab National Bank, India’s second-largest state-owned lender, posted its financial results for the first quarter of 2018-19, reporting a net loss of Rs 940 crore.

In March 2018, gross non-performing advances of all scheduled commercial banks stood at 11.6 percent of gross advances. The RBI outlined what it expected to happen to them a year hence in three scenarios. At best, it projected gross NPAs of 12.2 per cent (baseline scenario); at worst, 13.3 per cent (severe stress scenario).