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New York: India’s public sector banks had the “worst phase” under the “combination” of former prime minister Manmohan Singh and ex-RBI governor Raghuram Rajan, and giving the ailing banks a “lifeline” was her primary duty now, Finance Minister Nirmala Sitharaman has said.
The public sector banks have been grappling with bad loans and the government has been taking measures to address the issue. In August, the government announced upfront capital infusion to the tune of Rs 70,000 crore into the public sector banks. Besides, 10 public sector banks are being consolidated into four. Delivering a lecture at the prestigious Columbia University’s School of International and Public Affairs here on Tuesday, Sitharaman said: “While economists can take a view of what prevails today or prevailed years ago, but I will also want answers for the time when Rajan was in the Governor’s post speaking about the Indian banks, for which today to give a lifeline is the primary duty of the Finance Minister of India. And the lifeline-kind of an emergency has not come overnight”.
“I do respect Raghuram Rajan as a great scholar who chose to be in the central bank in India at a time when the Indian economy was all buoyant,” she said during the lecture organised by the Deepak and Neera Raj Centre on Indian Economic Policies of the Columbia University.
“It was in Rajan’s time as Governor of the RBI “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,” she said.
“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,” the minister said amid laughter from the audience.
“With due respect, I’m not making fun of anybody but I certainly want to put this forward for a comment which has come like this. “I have no reason to doubt that Rajan feels for every word of what he is saying. And I’m here today, giving him his due respect, but also placing the fact before you that Indian public sector banks did not have a worst phase than when the combination of Singh and Rajan, as Prime Minister and the Governor of the Reserve Bank, had. At that time, none of us knew about it,” she said.
Sitharaman said while she is grateful that Rajan did an asset quality review, but people should know what makes the banks ailing today.
Sitharaman, while underlining that more reforms are on the anvil before the close of the fiscal year, said that Prime Minister Narendra Modi’s vision of making India a USD 5 trillion economy and a global economic powerhouse by 2024-25 is “challenging” but “realisable”.
She indicated that Indian economy has been on growth tragectory even since the Modi government came to power in 2014. “In 2014, when the National Democratic Alliance (NDA) was voted to power by the world’s largest democracy, India was a USD 1.7 trillion economy. In 2019, India has become a USD 2.7 trillion economy, having added one trillion US dollars in the last five years. Our vision to become a 5 trillion dollar economy by 2024-25 is challenging, but it is realisable,” Sitharaman said.
She said India has just entered the second half of Fiscal Year 2019-20 and already implemented a series of reforms, “with more on the anvil before the close of the year. (PTI)