Vice Chairman of NITI Aayog Rajiv Kumar has blamed former RBI governor Raghuram Rajan for declining growth in the country. Kumar stated that Rajan’s policies led to industries not receiving credits from banks.
Indian medium and small scale enterprises registering a 100 percent growth in loan defaults and non-performing assets surging on a year-on-year basis.
“It is a continuation of a trend of a declining growth, and why was this growth declining, it was declining because of the rising NPAs in the banking sector. When this government came into office that figure was 4 lakh crore, it rose to 10.5 lakh crore by the middle of 2017 because under the previous RBI governor, Mr. Rajan, they had identified mechanisms to identify stressed and non-performing assets which is why the banks stopped giving credit to industries,” said Kumar on Monday.
Kumar said the slowdown was not due to the decision to scrap old Rs 500 and Rs 1,000 notes but because of Rajan’s policies. “There was already a declining trend in the economy. Starting from the last quarter of 2015-16, the growth rate had come down for six successive quarters,” he said.
The banking sector crisis in India can be identified by Punjab National Bank (PNB), India’s second-largest state-owned lender, posting its financial results for the first quarter of 2018-19. It reported a net loss of Rs 940 crore.
In June 2018, the Reserve Bank of India (RBI) cautioned in its Financial Stability Report that things would worsen before they become better.