In an apparent criticism of RBI Governor Raghuram Rajan’s monetary policies, Union Minister Nirmala Sitharaman today said high interest rates are impacting cost competitiveness of the industry, especially small and medium enterprises.
The minister said she has already taken up the matter with the Finance Ministry and written to the Central Bank on the issue.
“I have already said that the input cost cannot be so high. Particularly, if we keep in mind those industries, say for small and medium industries, who do not have any group companies or holding companies outside from where they can get cheap credit. So interest rates do have a bearing on the cost competitiveness of industries,” Sitharaman said an interview to a news channel.
The minister was asked about BJP leader Subramanian Swamy attacking the RBI Governor for affecting fortunes of mid sized corporates by keeping the interest rates high.
Swamy had earlier stated that Rajan was “not appropriate for the country” as he had in the garb of controlling inflation raised interest rates leading to “collapse of industry and rise of unemployment in the economy”.
Asked whether she agrees with Swamy’s views, Sitharaman said: “Mid-sized corporates have been engaging with us. They have also voiced this. SMEs have voiced it. Industry, when interacting with the ministry, has also expressed similar views.”
She told NewsX channel: “We have communicated with the Finance Ministry, we have also once written to the Reserve Bank of India.”
While refusing to be drawn into Rajan’s statement that Inspector Raj culture still exists in India, the minister said the NDA government has been putting efforts to improve the ease of doing business and move towards “self certification, lack of inspections or absence of inspections”.
“The Licence Quota Raj which was leading towards corrupt practices is being taken head on by the Prime Minister and that is where the efforts are for… So this government has been working on bringing down inspections,” she said.
Last week, pitching for a better business environment for startups, Rajan had said that India has done away with the ‘licence raj’, but ‘inspector raj’ continues to some extent.