NEW DELHI:A week after being pulled up for the demonetisation drive, NITI Aayog Vice Chairman Rajiv Kumar on Monday said that it is not the note ban, but former RBI chief Raghuram Rajan’s policy over non-performing assets (NPAs) that is to be blamed for the sluggish economic growth in six quarters starting from the last quarter of FY 2015-16.
“The declining trend for the last six quarters starting 2015-16, when the growth rate was as high as 9.2 per cent, was not a result of demonetisation. The growth was declining because of the rising NPAs in the banking sector,” Kumar said in an interview to ANI.
The Reserve Bank of India’s annual report released last week, which showed that 99.3 per cent of all the high-value currencies that were demonetised was deposited back, had once again sparked the debate over demonetisation as a failed economic policy that dragged down the economic growth in India.
No wonder with the opposition using it for political advantage, government spokespersons had been rushing to explain that demonetisation was not a complete failure.
When Narendra Modi assumed office, the NPA figure was about Rs 4 trillion, which rose to Rs 10.5 trillion by the middle of 2017.
According to RBI, the number is expected to go up further in 2019.
Kumar blamed Rajan for this surge in NPAs.
“Under the previous RBI governor Mr Rajan, they had instituted a new mechanism to identify stressed NPAs. This continuously began to rise, after which the banking sector stalled credit disbursal to the industry,” he said.