The revised mechanism introduced by former RBI governor Raghuram Rajan to identify NPAs stopped banks from issuing fresh credit, resulting in slowing down of the economy in the post demonetisation period, NITI Aayog Vice Chairman Rajiv Kumar said.
The revised mechanism introduced by former RBI governor Raghuram Rajan to identify NPAs stopped banks from issuing fresh credit, resulting in slowdown of the economy in post demonetisation period, NITI Aayog Vice Chairman Rajiv Kumar told news agency ANI on Monday. It was just a continuation of a trend of fall in growth rate growth rate and not a shock due to demonetisation which resulted in an economic slowdown, he said.
“Starting from last quarter of 2015-16, the growth rate had come down for six successive quarters,” he added. There is no evidence to show a direct link between demonetisation and growth rate decline in the days which followed, he also said. During the given period, NPAs surged from Rs 4 lakh crore to Rs 10.5 lakh crore by mid-2017 when the NDA government took charge of office in 2014, he added.
The credit growth reduced to 1 or 2 percent and even reached negative in a few quarters, he also said. However, the government is compensating for the growth slowdown by increasing expenditure, he added.
On the recent statement issed by former finance minister P Chidambaram that latest Q1 growth numbers were based on the lowest base (5.6) in the last eight quarters and would decline in the future, Rajiv Kumar told ANI that the veteran Congress leader is issuing such statements just for the sake of “opposition dharma.”
“This is a completely false narrative and I am afraid leading people like Mr.Chidambaram and our former Prime Minister added to this,” Rajiv Kumar said.
“I think it is better for him to accept that all the economic reforms that have been implemented by this government has begun to yield good results and he will be pleasantly surprised going forward because this growth rate will be maintained,” he also told ANI.