Nirmala Sitharaman Blames UPA Govt, Rajan For 'Worst' Banking Crisis, Manmohan Singh Hits Back

Congress MP Dr Manmohan Singh responding to Finance Minister Nirmala Sitharaman’s remarks blaming him for the banking crisis said the problem has to be diagnosed first to fix the economy.

“I won’t like to comment on that statement, but before one can fix the economy, one needs a correct diagnosis of its ailments and their causes. The government is obsessed with trying to fix blame on its opponent. Thus it is unable to find a solution that will ensure the revival of the economy,” said, former Finance Minister Manmohan Singh.

Earlier the finance minister had blamed Manmohan Singh and former RBI governor Raghuram Rajan for the “worst phase” of Indian public sector banks in a lecture at Columbia University on Tuesday.

FM Blamed Manmohan-Rajan Duo

When asked about Rajan’s comments that in its first term, the government was extremely centralised and the leadership lacked consistent and articulated vision on how to achieve economic growth. To which Sitharaman replied that giving all public sector banks a lifeline is her primary duty. But blamed Rajan’s tenure for major issues with bank loans.

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. It was in Rajan’s time that loans were given just based on phone calls from crony leaders. But 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 the Reserve Bank of India (RBI), had.” she said.

Bad loans of PSBs rose from Rs. 9,190 crore in 2011-2012 to Rs. 2.16 lakh crore in 2013-2014, according to the RBI. The National Democratic Alliance (NDA) government came to power in May 2014.

Sitharaman said while she was grateful that Rajan carried out an asset quality review, people should know what made the banks ailing today.

According to the RBI’s provisional data on global operations in June, gross non-performing assets (NPAs) of PSBs have declined by Rs 89,189 crore from the peak of Rs 8.95 trillion in March 2018 to Rs 8.06 trillion in March 2019.

Manmohan’s Corrupt Leadership?

“I’d like to say that the very democratised leadership led to a whole lot of corruption. The Prime Minister, after all, is the first among equals in any cabinet,” Sitharaman said.

“In a country as diverse as India, you need effective leadership. The UPA government left behind such a nasty stink of corruption, which we are cleaning up even today,” FM added.

Sitharaman’s policies and decisions have been criticised by the opposition and also her husband, Parakala Prabhakar, who wrote in an editorial in The Hindu that the Narendra Modi government should “wholly embrace” the 1991 model evolved by then Prime Minister P.V. Narasimha Rao and his finance minister Manmohan Singh to address the current economic slowdown.

Also Read: Majoritarianism & Authoritarianism Taking India Down A “Dark & Uncertain Path”: Raghuram Rajan