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Bad loan tirade at old guard duo

“Worst phase” under the “combination” of former PM Manmohan Singh and ex-RBI governor Raghuram Rajan, says Sitharaman

By PTI in New York
  • Published 17.10.19, 1:32 AM
  • Updated 17.10.19, 1:32 AM
  • a min read
Nirmala Sitharaman in New York on Tuesday PTI

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.

Delivering a lecture at the Columbia University’s School of International and Public Affairs 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 a lecture organised by the Deepak and Neera Raj Centre on Indian Economic Policies of the Columbia University.

During a recent lecture at Brown University, Rajan had mentioned that in its first term, the Narendra Modi-government was extremely centralised and the leadership did not appear to have a consistent articulated vision on how to achieve economic growth.

Asked about the ex-RBI governor’s comments, the minister said there were major issues with bank loans during Rajan’s tenure as the central bank head.

On Rajan’s comment on centralised leadership now, she said: “You need to have a country as diverse as India with an 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.”

“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.