Niti Aayog vice-chairman Rajiv Kumar on Monday blamed the former Reserve Bank of India (RBI) governor Raghuram Rajan for the slowdown in country’s economy in the days that followed demonetisation.
Rajan’s policies on non-performing assets (NPAs) led to the slowdown in the economy and not the government’s decision to ban 500 and 1000 rupee notes, the Niti Aayog vice-chairman said in an interview to a news agency.
He said the NPAs rose to Rs 10.5 lakh crore by mid-2017 from Rs 4 lakh crore when the present government took office due to Rajan’s revised mechanism of identifying NPAs and thereby banks stopped giving credit to the industry, thus slowing down the economy.
“The growth of credit came down to 1 or 2 percent or even negative in some quarters,” Kumar said while adding that the government is compensating for this by ramping up expenditure.
Notably, India’s gross domestic product (GDP) growth rate came at 6.1 percent in the fourth quarter of the fiscal year 2016-17 — the three month-period that followed the note ban.
