Union Finance Minister Nirmala Sitharaman said that the Indian public sector banks had the ‘worst phase’ under former Prime Minister Manmohan Singh and RBI Governor Raghuram Rajan.
Finance Minister Nirmala Sitharaman, delivering a lecture at the Columbia University’s School of International and Public Affairs here on Tuesday, said that her primary duty today was giving ‘lifeline’ to all the public sector banks.
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“I’m taking a minute to respond and 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,” Sitharaman said during the lecture organised by the Deepak and Neera Raj Centre on Indian Economic Policies of the Columbia University.
Responding to Raghuram Rajan’s constant tirades against the Modi government, Sitharaman said that it was during Rajan’s time as Governor of the Reserve Bank that loans were given just based on phone calls from crony leaders. She said the banks are depending on the government’s equity infusion to get out of that mire till today.
The Union Minister said that there were major issues with bank loans during Rajan’s tenure as the central bank head.
Rajan had commented during a recent lecture at Brown University in which he had claimed that the Narendra Modi government had not done better on the economy because the government was extremely centralised and the leadership did not have a consistent articulated vision on how to achieve economic growth.
“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,” Sitharaman said, amidst laughter from the audience.
She added, “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 the worst phase than when the combination of Singh and Rajan, as Prime Minister and the Governor of Reserve Bank, had. At that time, none of us knew about it,” she said.
“I am grateful that Rajan did an asset quality review but I’m sorry, can all of us put together also think of asking what ails our banks today. Where has it been inherited from,” she added.
Sitharaman said that while economists can take a view of what prevails today or prevailed years ago and said she wanted 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.
Responding to the question of whether there has been a centralised leadership in the present government, Sitharaman took a dig at Rajan by pointing out that if there was a feeling that there’s been a centralised leadership currently, then I would like to say that very ‘democratised leadership’ led to a whole lot of corruption.
“You need to have a country as diverse as India with effective leadership. A rather too democratic leadership, which probably will have the approval of quite a lot of liberals, I’m afraid, left behind such a nasty stink of corruption, which we are cleaning up even today,” she said.
The event was also attended by former NITI Aayog Vice-Chairman Arvind Panagariya, professor and eminent economist Jagdish Bhagwati and India’s Consul General in New York, Sandeep Chakravorty.