New Delhi: Days after the GDP growth rate for the first quarter of 2018-19 was pegged at the highest in three years, Niti Aayog vice-chairman Rajiv Kumar on Monday lashed out at former RBI governor Raghuram Rajan for a succession of ills, including the declining growth rate over the last three years. Pinning the blame squarely on Rajan's policies as Governor of the entral bank, Kumar said the economic growth was declining due to rising NPAs in the banking sector.
"There was a trend of declining growth and why was the growth declining? The growth was declining because of the rising non performing assets or bad loans (NPAs), 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 fact, in some cases like MSMEs, credit growth shrank. Even in the large industries, the growth of credit came down to measly 1 per cent in some quarters," claimed the Niti Aayog vice chairman. "This has been the highest de-leveraging of commercial credit to the industry in India's economic history," Kumar said, while adding that this is what is being compensated by the government by ramping up of public capital expenditure.
