Notes Ban Not The Reason For Economic Slowdown: NITI Aayog Vice Chairman

NITI Aayog Vice Chairman Rajiv Kumar, emphasising that there was no direct link between demonetisation and the economic slowdown.

Under Raghuram Rajan as the chief of the Reserve Bank of India (RBI), non-performing assets kept rising, Mr Kumar said.

"It is a false narrative and people like the former prime minister (Manmohan Singh) and Chidambaram added to this," Mr Kumar said to the RBI report that led to the conclusion that the notes ban of 2016 was not just a farce but hit the economy squarely in the jaw.

"If you look at the growth rate statistic, it came down not because of demonetization, but was simply the continuation of a trend. Growth rate had been falling for six quarters," said the NITI Aayog Vice Chairman.

"I had suggested demonetisation in 2008 and I would do it anyway, to cleanse our economy," Mr Kumar told NDTV.

He also referred to rising non-performing assets or NPAs in the banking sector.

"My views on GDP's decline being unrelated to solely demonetisation & having begun way before with stricter norms of NPA by RBI under Mr Rajan R fact-based & self-explanatory...," Mr Kumar tweeted.
Following the decline in growth rate, the NITI Aayog official said, ramping up of capital expenditure was necessary to counter the decline in credit disbursal to industry players.

"Even to the large industry, the growth of credit came down to one per cent and two and a half per cent in some months, and even negative in some quarters. Never had we seen such a continuous and persistent year upon year deleveraging of credit. This is the cause of slowdown of growth."

He said the government is compensating for this by ramping up public capital expenditure. "So it has been because of the government that you have now seen a rise in the quarterly growth rate since the second quarter of 2017-18," he said.

(With inputs from ANI)