Fix economy with correct diagnosis, don’t just blame UPA: Manmohan Singh’s riposte to FM Sitharaman

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Published: October 18, 2019 6:39:04 AM

Interestingly, Sitharaman’s observation at an event in the US was in response to Rajan’s recent lecture at Brown University in which the former RBI governor had indicated that in its first term, the Modi government had not done better, as the leadership didn’t appear to have a consistently articulated vision on how to achieve economic growth.

Nirmala Sitharaman, Former Prime Minister, Manmohan Singh, Maharashtra assembly elections, PMC bank, PMC bank crisis, Raghuram Rajan, economy newsFormer Prime Minister Manmohan Singh

Former Prime Minister and senior Congress leader Manmohan Singh on Thursday hit back at finance minister Nirmala Sitharaman for blaming him and Raghuram Rajan for the current bad loan crisis in the banking sector, saying the “government is obsessed with trying to fix blame on its opponent”. Singh also accused the BJP-led governments at both the Centre and Maharashtra of ignoring ‘people-friendly policies’, pointing at the Punjab and Maharashtra Co-operative (PMC) bank crisis that impacted 1.6 million depositors.

Addressing a press conference in Mumbai in the build-up to the Maharashtra assembly elections next week, Singh, who was the Prime Minister from 2004 to 2014, said: “I won’t like to comment on that (FM’s) statement, but before one can fix the economy, one needs a correct diagnosis of its ailments and their causes. The government is obsessed with trying to fix blame on its opponent, thus it is unable to find a solution that will ensure revival of the economy.”

“When I was in office what happened did happen. There were some weaknesses. But you can’t claim that the fault lies with the UPA always. You have been in office for five years. Mainly passing buck to UPA is not enough,” he added.

Interestingly, Sitharaman’s observation at an event in the US was in response to Rajan’s recent lecture at Brown University in which the former RBI governor had indicated that in its first term, the Modi government had not done better, as the leadership didn’t appear to have a consistently articulated vision on how to achieve economic growth.

Speaking at Columbia University, Sitharaman responded: “It was in Rajan’s time as governor of the Reserve Bank that loans were given just based on phone calls from crony leaders and public sector banks in India till today are depending on the government’s equity infusion to get out of that mire. “Dr Singh was the Prime Minister and I’m sure Dr Rajan will agree that Dr Singh would have had a ‘consistent articulated vision’ for India,” she added.

Recently, citing stress in the shadow-banking space, Moody’s cut India’s GDP growth projection for the calendar year 2019 by as much as 60 basis points to just 6.2%. Separately, the global rating agency has said among the 13 Asia-Pacific economies, India’s banking system is the most vulnerable to a deterioration in corporate debt repayment capacity, along with Indonesia’s. The government has been capitalising state-run banks, which are recovering from a prolonged period of a bad loan mess, caused by what it calls the “indiscriminate lending” during the UPA era.

On the PMC crisis, Singh asked the RBI and the government to find a solution to the woes of depositors, who had been protesting against restrictions on daily withdrawals beyond `40,000 now.

The former Prime Minister stressed that business sentiment was going downhill in Maharashtra, and the state has witnessed one of the highest factory shut-downs in the last five years. The ongoing economic slowdown and the government’s “apathy” affected aspirations and future of Indians, he asserted.

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