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2 minutes read

Sitharaman Blames Raghuram Rajan & Manmohan Singh For India’s Current Banking Crisis

| Published on October 17, 2019

Finance Minister Nirmala Sitharaman, while addressing the current banking crisis, Columbia University’s School of International and Public Affairs on Tuesday, said that she holds the duo of Manmohan Singh & Raghuram Rajan responsible for subjecting public sector banks (PSBs) to their “worst phase”.

The minister said,”

“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 the Reserve Bank of India (RBI), had. At that time, none of us knew about it.”

Sitharaman said while she is grateful that Rajan did an asset quality review, but people should know what makes the banks ailing today and also that giving all the public sector banks a lifeline is her primary duty.


The event was also attended by former NITI Aayog Vice-chairman, Arvind Panagariya, professor and eminent economist Jagdish Bhagwati & India‘s Consul General in New York, Sandeep Chakravorty.

To a question of whether leadership has been centralized now, Ms. Sitharaman said,

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

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.

Both the former Prime Minister and the RBI Governor are fierce critics of the economic policies of the government led by Prime Minister Narendra Modi, including the overnight notes ban in November 2016 that they say broke the back of the cash-dependent informal economy.

Also Read: How Nirmala Sitharaman’s Tax Reform Policies Got Her Online Appreciation.

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