Holding former Reserve Bank of India (RBI) governor Raghuram Rajan accountable for slowdown in the economy, Niti Aayog vice chairman Rajiv Kumar today said that it wasn't demonetisation but deleveraging of credit under Rajan's tenure that led to economic slowdown.
In an interview to news agency ANI, Kumar said that growth rate came down not because of demonetisation but there was a declining trend. "Starting from last quarter of 2015-16, the growth rate had come down for six successive quarters," he said.
"This was simply a continuation of a trend and not because of a shock given to it by demonetisation as has been claimed. There is no evidence to show the direct link between demonetisation and slowdown in the growth rate," Kumar added.
Pinning the blame squarely on Rajan's policies as governor of central bank, Kumar said the economic growth was declining due to rising NPAs in the banking sector. "When this government came into office, this figure was about 4 lakh crore. It rose to 10.5 lakh crore by the middle of 2017," he added.
"Under the former RBI Governor Raghuram Rajan, they had instituted new mechanisms to identify stressed and non performing assets. This is why the banking sector stopped giving credit to the industry. In fact, in some cases like MSMEs, credit growth shrank. Even in the large industries, the growth of credit came down to measly 1 per cent in some quarters," claimed Niti Aayog vice chairman.
"This has been the highest deleveraging of commercial credit to the industry in India's economic history," Kumar said, while adding that this is what is being compensated by the government by rampnig up of public capital expenditure.