Indiscriminate lending led to current bad debt crisis, says Jaitley

MUMBAI:HIGH economic growth in the last decade riding on the back of elevated credit offtake because of ‘indiscriminate lending’ has led to the current bad debt crisis, finance minister Arun Jaitley said on Monday.

When growth is engineered on the strength of a 31% or a 28% credit offtake in a given year, “history will certainly record it as some indiscriminate lending, which is bound to show its impact on future”, Jaitley said through video conferencing at the Indian Banks’ Association’s (IBA) annual general meeting.

The finance minister’s comments come at a time when the ruling Bharatiya Janata Party and the Congress are trading charges over the gross domestic product back series data.

According to back series calculations by a committee appointed by the National Statistical Commission, the economy grew in double digits twice—10.23% in 2007-08 and 10.78% in 2010-11—during the tenure of the Congress-led United Progressive Alliance (UPA) under former Prime Minister Manmohan Singh.

The calculations have been made by a sub-committee headed by NR Bhanumurthy, professor at the National Institute of Public Finance and Policy (NIPFP), within the committee on real sector statistics headed by Sudipto Mundle, emeritus professor at the institute.

The average growth rate in the 10 years of UPA rule was at over 8% against the 7.35% witnessed during the four-year tenure of the Narendra Modi government.