Days after the GDP growth rate for the first quarter of 2018-19 was pegged at the highest in three years, Niti Aayog vice-chairman Rajiv Kumar has blamed former RBI governor Raghuram Rajan for a succession of declining growth rate over the last three years. Rajiv Kumar said that the GDP growth rate was declining for over half-a-dozen quarters due to the policies of Raghuram Rajan as RBI governor.

Rajiv Kumar said, "There was trend of declining growth and why the growth was declining? The growth was declining because of the rising NPA, the non-performing assets in the banking sector. When this government came into office, those figures were about Rs 4 lakh crore. It rose to Rs 10.5 lakh crore by the middle of 2017."

The NPA rose and the GDP growth rate declined "because under the previous governor (Raghuram) Rajan, they had instituted new mechanisms to identify stressed or non-performing assets and these continuously continued to grow up which is why the banking sector stopped giving credit to the industry," Rajiv Kumar said.

The Niti Aayog vice chairman said that the industry that drives the nation's economy was not getting money from the banks leading to sluggishness in the market and decline in GDP growth rate. He said, "In fact in some cases like the medium and small scale industries, their credit actually shrank. There was a negative growth in some years. And, then even to the large industries, the growth of credit came down to one per cent or 2.5 per cent and in some quarters even negative."

"This has been the instance of historically the highest deleveraging of the commercial credit to the industries in India's economic history. Never has been seen such a consistent year upon year deleveraging of credit. This is the cause for the slowdown of the growth. And, this is what has been compensated by the government by the ramping up of the public capital expenditure," Rajiv Kumar said.

The GDP growth rate for April-June quarter of 2018-19 has been recorded at 8.2 per cent. Over 8 per cent of quarterly growth was registered last time in the first quarter of 2016-17. So, after eight quarters, Indian economy grew at over 8 per cent.

The GDP growth rate had dipped to 5.7 per cent in what seems to have been the bottoming out of the economy. The latest GDP growth rate was attributed to the good quarterly performance to 13.5 per cent growth in the manufacturing sector and near 9 per cent in the construction sector.

The Economic Survey projected that Indian economy would achieve growth rate of 7-7.5 per cent during 2018-19.