Video: Raghuram Rajan responsible for slowdown, not demonetisation, says Niti Aayog vice chairman

Rajiv Kumar, the vice-chairman of economic think-tank NITI Aayog, on Monday, said that it wasn't demonetisation but deleveraging of credit under former RBI chief Raghuram Rajan's tenure that led to the economic slowdown in India.

In an interview, Kumar said that growth rate came down not because of demonetisation but there was a declining trend.

"Starting from last quarter of 2015-16, the growth rate had come down for six successive quarters," he said.

"It is a continuation of a trend of a declining growth, and why was this growth declining, it was declining because of the rising NPAs in the banking sector. When this (NDA) government came into office that figure was 4 lakh crore, it rose to 10.5 lakh crore by the middle of 2017 because under the previous RBI governor, Mr Rajan, they had identified mechanisms to identify stressed and non-performing assets which is why the banks stopped giving credit to industries," Kumar said.

He added that there was no evidence to prove that there was a direct link between demonetisation and slowdown in the growth rate.

On the recent statement issued by former finance minister P Chidambaram that latest Q1 growth numbers were based on the lowest base (5.6) in the last eight quarters and would decline in the future, Rajiv Kumar told ANI that the veteran Congress leader is issuing such statements just for the sake of “opposition dharma.”

“This is a completely false narrative and I am afraid leading people like Mr Chidambaram and our former Prime Minister added to this,” Rajiv Kumar said.

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.