Finance minister Nirmala Sitharaman, who is at a tough spot mitigating the fiscal deficit in the country, on Tuesday said the Public Sector Banks had their worst time during economists Manmohan Singh and Raghuram Rajan’s time.

Speaking at Columbia University’s School of International and Public Affairs in New York, Sitharaman said that giving all the public sector banks a “lifeline” is her primary duty.

Turning the tables on finance ministry’s critics and reputed economists, Sithatraman pointed at a massive amount of bad loans in state-run banks when the United Progressive Alliance (UPA) was in power. She held the duo of former Prime Minister Manmohan Singh and former Reserve Bank of India Governor Raghuram Rajan responsible for putting public sector banks (PSBs) through the “worst phase.”

“I’m taking a minute to respond… I do respect Raghuram Rajan as a great scholar who chose to be in the central bank in India at a time when the Indian economy was all buoyant,” said Sitharaman. Rajan has been critical of Modi government’s  extremely centralised policies and the leadership’s lack of having a consistent articulated vision on how to achieve economic growth, as he expressed in his recent lecture at Brown University.

Only “internal cohesion and economic growth” and not “majoritarianism” will help strengthen India’s national security. “In the long run, it seems to me that internal cohesion and economic growth rather than divisive, populist majoritarianism will be India’s root to national security. So all this sort of majoritarianism may certainly for a while win elections, but it is taking India down a dark and uncertain path,” Rajan said at the OP Jindal lecture at Watson Institute, Brown University, on October 9.

Reacting to Rajan’s comments at Columbia University’s School of International and Public Affairs Sitharaman said, “I have no reason to doubt that Rajan feels for every word of what he is saying. And I’m here today, giving him his due respect, but also placing the fact before you that Indian public sector banks did not have a worst phase than when the combination of Singh and Rajan, as Prime Minister and the Governor of Reserve Bank, had. At that time, none of us knew about it.”

“It was in Rajan’s time as Governor of the Reserve Bank that loans were given just based on phone calls from crony leaders and public sector banks in India till today are depending on the government’s equity infusion to get out of that mire,” she said.

“Dr Singh was the Prime Minister and I’m sure Dr Rajan will agree that Dr Singh would have had a ‘consistent articulated vision’ for India,” she said.

“With due respect, I’m not making fun of anybody but I certainly want to put this forward for a comment which has come like this. I have no reason to doubt that Rajan feels for every word of what he is saying. And I’m here today, giving him his due respect, but also placing the fact before you that Indian public sector banks did not have a worst phase than when the combination of Singh and Rajan, as Prime Minister and the Governor of Reserve Bank, had. At that time, none of us knew about it,” she said.