India’s railways and coal minister Piyush Goyal said the country’s central bank should review its policies and “introspect” to check if they contributed to the slowdown of economic growth while welcoming the second successive rate cut by the Reserve bank of India (RBI).
“To some extent, RBI also has to introspect, whether they had any role to play in the economy going down to a potential 7.2% (growth) this year, instead of 7.4 or 7.6%, or why we didn’t achieve double-digit growth faster,” Goyal said, while addressing the CII annual session in the city on Friday.
“I think every organisation will have to introspect. How much contribution have they made to the woes of the country today,” Goyal said. Liquidity crunch in the second half of the last fiscal is seen as one of the main reasons for GDP growth declining to 7% in FY19 from 7.2% last fiscal.
RBI sees the economy growing 7.2% in the current fiscal while Fitch Ratings pegged it at 6.8%. The central bank cut its key policy rate by 25 basis points on Thursday, the second successive rate cut, factoring in softer growth and benign inflation.
Goyal’s comments were apparently targeted at former central bank governor Urjit Patel, when serious differences arose between the central bank and the government over multiple issues, liquidity being one. Patel resigned in December. The government then appointed former economic affairs secretary Shaktikanta Das as the new governor.
“Certain steps, over a period of time, I believe, could have been done differently. I believe growth should as much be an objective of the Reserve Bank of India as controlling inflation,” Goyal said.
“It is mandated to manage inflation within a band and also to look after the growth of the economy,” Goyal said endorsing the recent steps taken by the central bank.
The RBI has in recent months tried to address the liquidity crunch and held its first ever dollar/rupee swap last month to infuse for rupees into the system.
“I am delighted that the RBI governor and his team today are also recognising growth as a priority. I compliment him for yesterday’s policy, which has reflected the good work of this government and he has also appreciated that interest rates are an important element of growth,” Goyal said.
Goyal was interim finance minister twice last fiscal when finance minister Arun Jaitley was indisposed due to illness.
“With the lowering of interest rates for the second time in succession, a clear signal has gone that the government’s efforts in lowering inflation down to levels which are unheard of in the India’s history and are bearing results and will help India become much more competitive in the world, with better financing terms, lower interest rates and hopefully better liquidity,” he said.
“I am glad that the governor of the Reserve Bank of India has made the right moves in the last few months.”
In an apparent dig at the Congress manifesto, Goyal said the country must move away from the dole culture in order to empower people to become self-reliant, to be entrepreneurs, and work for a living.
“Otherwise, I think it’s a race to the bottom if we keep encouraging doles, if we keep encouraging bad behaviour. Then we will be racing to the bottom instead of aspiring to the top,” Goyal said.
Defending the electoral bonds scheme, Goyal said the BJP government has taken steps in the right direction towards making political funding clean and legitimate. He said that the fear of other parties would earlier deter businessmen to write a cheque in favour of a certain political party.