No economic and political lover in India would forget the former Governor of Reserve Bank of India, Raghu Ram Rajan. He has been praised all over the country for his commendable efforts as the RBI governor but he left the office as soon as the Modi Government came into force in India. Now, he has been into teaching but often comments on the Indian economic situation without any hesitation.
Commenting on the demands that have been coming out from all parts of the country about the extension of the Moratorium on loans, Rajan said that this culture has to be stopped and clarified that he has been in senses to make this confident statement about ‘this moratorium process shouldn’t be extended’.
In that order, he also commented on Andhra Pradesh’s microfinance crisis. While commenting on this Moratorium on loans, he cited the AP’s micro Finance crisis as a very good example that can actually support his statement. Rajan reminded that after the government assures people once that there is no need to pay money… they are definitely not going to save money which the people don’t realize the trick.
“This makes it difficult for them to repay the loan and then it becomes difficult to make a habit of bringing back payments. This is also the reason for the microfinance crisis that has plagued AP in the past. Microfinance institutions are weakened because of this. If a moratorium is imposed for a long time, it will be difficult for the banks to recover the amount,” Rajan said.
Finally, Rajan said that though Covid is increasing at an unexplainable level, RBI has done a very good job and the rupee value hasn’t been too low and asserted it as the welcome part in this entire episode. However, it is a bit of shame for the AP financial ministry that a person of this level cited the Andhra Financial crisis as a bad thing to explain one of the burning issues in the country.