Mumbai: Former Prime Minister Manmohan Singh said on Thursday that the current slowdown in the country coupled with government apathy has badly hit the Indian economy adding fuel to the Congress campaign to highlight the Indian economy's state.
"There is gloom in the automobiles hub of Pune, slowdown has led to a large number of factories shutting down in Maharashtra. The state is hit by a grave economic crises, but the government seems obsessed with trying to fix blame," said Singh.
He said that from being No. 1 in investments, Maharashtra has now become No. 1 in farmers' suicides.
Manmohan urged for setting up labour-intensive industries, among other measures, to tackle the economic crises.
In trying to revive economic growth from its 5 percent level in the April-June quarter, the government cut corporate tax that was expected to result in revenue loss of 1.5 trillion rupees ($21 billion).
India's economy grew at its weakest pace since 2013 between April and June as consumer demand and government spending slowed amid global trade frictions.
The central bank has cut the repo — or the rate at which the RBI lends short-term money to commercial banks — by 110 basis points in the past four consecutive polices.
Finance Minister Nirmala Sitharaman has said she will relook the fiscal calculations before the next budget in February before announcing the fiscal deficit target for the year.
Sitharaman blames Manmohan Singh, Raghuram Rajan
Manmohan's attack comes amidst Finance Minister Nirmala Sitharaman's attack against him on Wednesday.
India's public sector banks had the "worst phase" under the "combination" of former prime minister Manmohan Singh and ex-RBI governor Raghuram Rajan, and giving the ailing banks a "lifeline" was her primary duty now, Sitharaman had said.
The public sector banks have been grappling with bad loans and the government has been taking measures to address the issue. In August, the government announced upfront capital infusion to the tune of Rs 70,000 crore into the public sector banks. Besides, 10 public sector banks are being consolidated into four.
"I do respect Raghuram Rajan as a great scholar who chose to be in the central bank in India at a time when the Indian economy was all buoyant,” she said during the lecture organised by the Deepak and Neera Raj Centre on Indian Economic Policies of the Columbia University.
Asked about the ex-RBI governor's comments during a recent lecture at Brown University in which he had apparently mentioned that in its first term, the Narendra Modi government had not done better on the economy because the government was extremely centralised and the leadership does not appear to have a consistent articulated vision on how to achieve economic growth, the minister said instead there were major issues with bank loans during Rajan's tenure as the central bank head.
Responding to the question, Sitharaman further pointed out that if there is a feeling that there's been a centralised leadership now, "I'd like to say that very democratised leadership led to a whole lot of corruption. Very democratised leadership. The Prime Minister, after all is the first among equals in any cabinet".
"It was in Rajan's time as Governor of the RBI that loans were given just based on phone calls from crony leaders and public sector banks in India till today are depending on the government's equity infusion to get out of that mire," she 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 a worst phase than when the combination of Singh and Rajan, as Prime Minister and the Governor of the Reserve Bank, had. At that time, none of us knew about it, she said.
Sitharaman said while she is grateful that Rajan did an asset quality review, but people should know what makes the banks ailing today.
According to RBI data in June on global operations (provisional data for the financial year ending March 2019), Gross Non-Performing Assets (NPAs) of Public Sector Banks have declined by Rs. 89,189 crore from the peak of Rs. 8,95,601 crore in March 2018 to Rs. 8,06,412 crore in March 2019 (provisional data).
(With inputs from IANS and PTI.)