India's growth declined due to Raghuram Rajan's policies: Niti Aayog Vice-Chairman Rajiv Kumar

Niti Aayog Vice Chairman Rajiv Kumar claimed that the growth declined because of Raghuram Rajan's policies and rising NPAs in the banking sector.

NEW DELHI: Niti Aayog Vice Chairman Rajiv Kumar on Monday held former Reserve Bank of India Governor Raghuram Rajan responsible for the country's declining economy. 

"Growth was declining due to former RBI Governor Raghuram Rajan's policies. It declined because of rising NPAs in the banking sector. Because under previous governor Mr Rajan, they brought in new mechanisms to identify stressed NPAs and these continued to go up which is why banking sector stopped giving credit to industry," Kumar said.

As per a recent report, the gross non-performing assets (GNPAs) of the banking sector is likely to improve to 10 per cent in March 2019, from 11.52 per cent as on June 30, 2018, as nearly 60 per cent of the bad loans of the sector are under active resolution.

The net NPA is also expected to decrease to 4.3 per cent, from 5.92 per cent as of June-end this year, Icra said in its report.

With expiry of the 180-day period provided in RBI's February 12 circular for resolution of large stressed borrowers, rating agency Icra has estimated that 70 big companies accounting for around Rs 3.8 trillion of debt may be heading for resolution under the Insolvency and Bankruptcy Code (IBC).

A Parliamentary committee had recently questioned the RBI for failing to take preemptive action in checking bad loans in the banking system prior to the Asset Quality Review undertaken in December 2015.

According to sources familiar with the report of the Standing Committee on Finance, RBI needs to find out as to why the early signals of stressed accounts were not captured before the AQR. The report was adopted by the Committee headed by senior Congress leader M Veerappa Moily and is likely to be placed in the Parliament in the Winter Session.