Sitharaman, Manmohan in war of words over state of Indian economy

New Delhi: A war of words has erupted between former prime minister Manmohan Singh and finance minister Nirmala Sitharaman with each pinning the blame for the economic downturn on the other.

Singh on Thursday responded to a comment by Sitharaman, saying the government should stop blaming the opposition as it has been in power for more than five years. “This government has now been in office for five years. It should have learnt from our mistakes and provided a credible solution for the economy,” he said.

Sitharaman who is in Washington to attend the annual meeting of the International Monetary Fund, told reporters on Thursday that she was not indulging in a blame game. Rather, she said, she is pointing out the wrongdoing that happened in public sector banks. It is her government which is trying to clear the clog in PSBs and pursuing cases against defaulters, she added.

“I respect Dr Manmohan Singh for telling me not to do the blame game, but recalling when and what went wrong during a certain period is absolutely necessary to put it in context, now that I am being charged that there is no narrative at all on the economy. Unlike the way earlier loans could be taken from banks on phone calls. We don’t support crony capitalism. That is part of my narrative on economy. That’s when I would like to mix both my narratives together with stating what went earlier. I wish the Congress party has the courage and conviction to hear it loud and clear.”

It all started with Sitharaman on Tuesday saying that Indian public sector banks had the “worst phase” under PM Singh and RBI governor Raghuram Rajan. She was responding to a question on Rajan’s earlier comment that the Narendra Modi government has not done well on the economy because it was extremely centralized and the leadership did not appear to have a consistent articulated vision on how to achieve economic growth.

“I’m not making fun of anybody, but I certainly want to put this forward for a comment which has come like this. 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 Reserve Bank, had. At that time, none of us knew about it,” she said.

Responding to her comments, Singh on Thursday said the government should stop blaming the opposition. “I have just seen the statements by finance minister Nirmala Sitharaman. I won’t like to comment on that statement, but before one can fix the economy, one needs a correct diagnosis of its ailments and their causes. The government is obsessed with trying to fix blame on its opponents, thus it is unable to find a solution that will ensure the revival of the economy,” he said.

Singh added that achieving the $5 trillion target for the economy by 2024, set by the Narendra Modi administration, will not be possible under the current circumstances, with annual growth projected to cool to 6% or lower according to some estimates.

“For reaching the $5 trillion mark, the economy would need to grow at 10-12% per annum. What is happening under the BJP (Bharatiya Janata Party) government is that the growth rate is declining. Even the International Monetary Fund (IMF) has come up with a statement that India’s growth rate will be only 6.1% as against 7%, which was mentioned some months ago,” said Singh.

Later on Thursday, Sitharaman retorted: “We will reach a $5 trillion economy with policies that will be implemented in an open and transparent manner.”

IMF on Tuesday slashed its growth forecast for India to 6.1% for the current fiscal year from its July projection of 7%, citing weaker-than-expected outlook for domestic demand.