Chidambaram asks if all is well with economy then why banks' recap?

The Asian Age.

Business, Economy

Former Finance Minister claims Indian economy grew at its best rate of 8.5 per cent from 2004 to 2009, first UPA rule.

P Chidambaram is India's former Finance Minister and Senior Congress leader. (Photo: PTI)

Mumbai: Former Finance Minister and senior Congress leader P Chidambaram on Saturday raised several questions over Modi government's claim that all was well with the Indian economy. According to him, Indian economy saw its best performance during five years of first UPA government led by Dr Manmohan Singh.

Chidambaram was referring to Rs 2.11 lakh crore or roughly $33 billion recapitalisation of ailing public sector banks that are reeling under a total bad loans or non-performing assets worth Rs 10 lakh crore or more than $154 billion.

"Indian economy grew 8.5 per cent between 2004 and 2009, which is the best ever rate in India so far. But it has slowed down terribly since 2014," Chidambaram was quoted by a report in The Indian Express.

It may be noted that Prime Minister Narendra Modi rose to power riding the anti-black money and anti-corruption wave prevalent in country in the run up to the 2014 general elections. Modi took oath of the office of the Prime Minister on May 26 that year.  

PC as he is popularly called also took dig at incumbent Finance Minister Arun Jaitley who at a press conference last week had claimed India's macro-economic indicators were strong. “Finance Minister says macroeconomics are strong. If the economy is strong, why announce 6 lakh crore Bharatmala programme? Why bank recapitalisation?” Chidambaram asked.

At the widely-publicised press conference held last week, Jaitley along with his key aides in the Finance Ministry unveiled big bang reforms to overcome slowdown. In June, government statistics showed India's GDP grew at a record low of 5.7 per cent, a slide mainly triggered by on-off policy decisions like scrapping of high value notes and rollout of Goods and Services Tax.

Apart from recapitalisation of public sector banks, the finance ministry also informed it has earmarked Rs 7 lakh crore for infrastructure projects that aims to further enhance India's vast network of highways. The national highways will be built under Modi's Bharatmala roads project.

Chidambaram continues his criticism of government's poor handling of economic affairs: “Economy is at inflection point. If you take right steeps, it will go up but will go down if wrong steps are taken."