Strict Bad Loan Norms, Not Note Ban, Led To Growth Slowdown, Says NITI Aayog Chief
NITI Aayog Vice-Chairman Rajiv Kumar said India’s GDP growth fell to 5.6 percent in the April-June quarter last year because of an asset-quality review under former RBI Governor Raghuram Rajan, and not demonetisation.
The review by the RBI in 2015-16 caused the “biggest de-leveraging of commercial bank credit” in Indian industry, leading to a slowdown in growth.
It has nothing to do with demonetisation and this decline trend was because of much higher, stricter NPA recognition norms implemented by the RBI in 2015-16. And at that time, Dr Raghuram Rajan was the governor.Rajiv Kumar, Vice Chairman, Niti Aayog
Rajan has publicly said that demonetisation was not a “well planned or well-thought-out exercise”. “I told the government when the idea was first mooted that it seemed to me that people would find a way around,” he said at Harvard Kennedy School in April this year. That proved to be correct as, according to the RBI’s final tally, 99.3 percent of the withdrawn currency returned to banks.
Kumar, however, said the principal objective of Prime Minister Narendra Modi’s note ban decision was to curb corruption and demonetisation has been successful on this count.
Nobody can deny it and ever since that day, you have a change in culture and how people are going for economic businesses.Rajiv Kumar, Vice Chairman, Niti Aayog