Raghuram Rajan's policy led to slowdown of economy, not demonetisation: Niti Aayog VC

Amid claims by Congress that the demonetisation slowed down the economy, Niti Aayog's Vice-Chairman Rajiv Kumar on Monday said that there is not a shred of evidence to prove that the demonetisation led to the slowdown. He rather said that said that the post-demonetisation slowdown of economy was a result of a continuation of a declining trend which began after the last quarter of 2015-16.

He said that The declining trend for the last six quarters starting 2015-16, when the growth rate was as high as 9.2 per cent, was not a result of demonetisation but because of the rising NPAs in the banking sector.According to him when Narendra Modi government came to office, that figure was about Rs 4 lakh crore and it rose to Rs 10.5 lakh crore by the middle of 2017, due to the policy of the previous RBI governor Mr (Raghuram) Rajan. Rajan had instituted a new mechanism to identify stressed NPAs. Kumar besides pointed out that this continuously began to rise, after which the banking sector stalled credit disbursal to the industry. For the most part as Kumar notified in some cases like that of the Micro, Small and Medium Enterprises (MSME) industry, credit actually shrank and it was a negative growth in some years.

The Niti Aayog vice chairman said that the industry that runs the nation's economy was not getting money from the banks owing to lethargy in the market and decline in GDP growth rate.

Congress severely criticized PM Narendra Modi's note ban move from the begining. P. Chidambaram is one of the main critics BJP-led Centre's demonetisation move. Last week, Chidambaram said Indian economy lost 1.5% of GDP in terms of growth because of demonetisation. Former Prime Minister and Finace Minister Dr Manmohan Singh had last year also said that economy was on a downhill path, thanks to an 'adventure called demonetisation'.