Subramanian disagrees with Rajan, says flaunting wealth no issue

A day after RBI chief Raghuram Rajan sent out a stern message to defaulters hosting large birthday bashes despite owing large sums of money to the banks, Chief Economic Advisor Arvind Subramanian on Sunday suggested that it was not a matter of concern.

In agreement with him was NITI Aayog Member Bibek Debroy, who said, "I think wealth creation is good for society and wealth creation is good for everyone. You make tonnes of money and you go and flaunt it. It's none of my business."

Debroy did not directly comment on display of wealth by the rich who have defaulted on bank loans.

Both were asked to respond to Rajan's recent warning to wilful defaulters. Subramanian said, "We address owing the money problem, not flaunting... Flaunting, I agree with Bibek."

On the other hand the RBI Governor in Davos, asked rich businesses in serious debt to behave and not flaunt their wealth as it send across a wrong message to the public. Though Rajan did not name any particular individual, he was clearly indicating the UB Group chairman Vijay Mallya. The industry baron, who owes over Rs 7,000 crore in debt to various banks, including SBI, reportedly held out a lavish 60th birthday bash in Goa recently.

Rajan said that the RBI is devising ways for banks to recover their bad loans, which have crossed 6.03 per cent of total advances as of June 2015 as compared to 5.20 per cent in March 2015. RBI has given the banks time till March 2017 to clear up their balance sheets.

However Subramanian said that how wealthy individuals spend their money is "a private matter," even if they are in debt.