It is a matter of concern that India’s economy is slowing down even as the global environment is picking up, says former RBI Governor Raghuram Rajan.

“The twin balance-sheet problem, demonetisation and GST implementation are responsible for the slowdown in GDP growth, but going forward, we should see private investment pick up and the economy rebound,” he told BusinessLine in an interview on Tuesday.

He defended the RBI on its active involvement in identifying non-performing loan accounts for resolution under the Bankruptcy Code. “It is not the RBI’s job to make commercial decisions...that said, there might be special circumstances in which it will be requisitioned to make decisions that the banks will not do,” he said.

Rajan sounded a note of caution on the subject of bank mergers. “You have to be careful in any kind of merger that you don’t merge and get a big weak bank! You’d hope that the strong bank would clean up the weak bank’s problems but there are very few banks without problems today in the public sector,” he said.

Asked about his controversial speeches as Governor and if he would act differently now given the chance he retorted: “I don’t think so. I think that the alternative is not changing the speeches, the alternative is not speaking! Because, if you have a situation where people are looking for a certain angle, they’ll find it in whatever you say.”

Click to read the interview: Focus on cleaning bank books, rather than mergers: Raghuram Rajan