CPI raps Rajan for 'opening up banking sector' remark

CPI today came down heavily on RBI Governor Raghuram Rajan for his statement regarding opening up the Indian banking sector to foreign banks, saying this would be "disastrous" for the national economy.

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It also attacked the UPA government for its move to privatise major airports already modernised by the public sector Airports Authority of India (AAI) and suggesting the same for Air India.

"Such moves are not acceptable. It will be disastrous for the entire economy as there has been no sign of the economy recovering in spite of such liberalisation being carried out by the government," CPI National Secretary D Raja told reporters here.

On Rajan's recent statements about major reforms being in the offing that would allow foreign banks to enter India in a big way and even take over domestic lenders, he said while 80 percent of banking activities were carried out by state-run banks, "foreign banks have never contributed to the development of the Indian economy."

"Some of these banks have also been responsible for serious unethical practices," he said and also criticised the government for earlier allowing private sector to open banks.

Deploring the government's efforts to privatise six AAI- developed airports including Kolkata and Chennai, he asked "why should the government hand over these airports to the private sector when already thousands of crore have been invested to upgrade and modernise them?"

Regarding the suggestion to privatise Air India, Raja said the national carrier "should not just be protected, but the government should adequately support it."

He said the CPI National Council, which met here for three days, had expressed serious concern over the deepening economic crisis. This crisis was "not just the impact of the global melt-down, but a self-made crisis as the ruling UPA-II is not ready to review the negative impact of liberalisation. On the contrary, it is trying to push forward these disastrous policies on various pleas."

Raja said large financial scams had become the order of the day, clearly reflecting the "nexus between corporates, bureaucrats and ruling politicians to loot national and natural resources and share the loot among themselves".