Yashwant Sinha slams RBI for measly rate cuts, questions growth data

Sinha also urged the small entrepreneurs to grab the opportunity to collaborate with foreign firms instead of depending on the governments.

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How can the central bank ask the private bankers to implement interest cuts and these banks are refusing to do it. We cannot have such a situation,” Sinha said.

Senior BJP leader and former Finance Minister has come down on the Reserve Bank of India’s “measly” rate cuts for the banks’ reluctance to pass on the benefits and questioned the NDA government’s claims of economic recovery since it came to power, saying the growth is up “only statistically”.

He said the central bank has been stingy in reducing repo rate, especially now that the inflation is under control. “I am shocked the RBI has cut in such small portions the repo rate which the banks have not reduced. It should surprise with 75 basis points and reduce the interest rates. How can the central bank ask the private bankers to implement interest cuts and these banks are refusing to do it. We cannot have such a situation,” Sinha said.

In a withering attack on the RBI’s policies, he said, “only a bad economist will say that one can control food inflation through the monetary policy. We started to attack food inflation by increasing the interest rate. We have recovered from the slowdown through efforts and now the RBI governor needs to cut interest rate by 2-3 per cent to give an impetus to the industry.”

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Addressing a function organised by the All India Association of Industries and the World Trade Centre, the former FM said the firewalls between the central government and the RBI need to be removed, as this is an opportune time for India to become a leader in Asia and world. Sinha’s son Jayant Sinha is the Union Minister of State for Finance.

On the growth, Sinha said, “we have recovered from the slowdown, at least statistically, if not really, because we have changed the norms.”

There is a need for debate on this and there should be comparable figures of economic growth from the previous years which can validate the claims of recovery, he said. “It cannot be that you prepare one year’s figures and say that now you’re doing 7.4 per cent or 8 per cent or 20 per cent,” said Sinha.

“What are the new norms (of computation)? Even the Chief Economic Advisor of the Government of India does not understand this. And we’ve put the same culprits (who initiated the change) to sit in judgement over this change,” Sinha said.

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Sinha also urged the small entrepreneurs to grab the opportunity to collaborate with foreign firms instead of depending on the governments. “It is an excellent time for the micro and small entrepreneurs to grab the opportunity instead of blaming the administration. PM has gone out to every important country in the world that can help make in India. Many of these countries have strong MSME sector. Now it is the responsibility of the MSMEs here to connect and collaborate,” Sinha said.