RBI’s Financial Stability Reports Never Mentioned Possible IL&FS Crisis, Says Arvind Subramanian
Former Chief Economic Adviser Arvind Subramanian criticised the Reserve Bank of India for its regulatory failures, saying its Financial Stability Reports never flagged off the possible liquidity crisis in Infrastructure Leasing & Financial Services Ltd.
Subramanian further said that India's biggest challenge at present is the twin balance sheet problem.
While RBI is one of the best institutions we have, we had some massive failures like IL&FS.Arvind Subramanian, Former CEA
"If I am not wrong, if you go back, and see Financial Stability Reports of last four-to-five years, I don't think IL&FS was specifically mentioned as a possible problem, something to be watched out for,” he said at an event.
Also read: Arvind Subramanian Defends His GDP Math
Recently, Subramanian was in news for claiming that India has been overestimating its GDP by 2.5 percent between 2011-12 and 2016-17.
Subramanian, a visiting lecturer in Public Policy at the Harvard University, was the CEA in finance ministry from October 2014 to June 2018.
The cash-strapped IL&FS group is sitting on a debt of about Rs 94,000 crore.
Several group companies have defaulted on the payment of interests on loans.
The problems at the diversified IL&FS group, that has been going in for many years, came to light when it defaulted on debt repayments last year.