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No timeline for economic recovery, says the Union Finance Minister in Washington

It was Finance Minister Nirmala Sitharaman’s turn in the nearly week long critical exchange that has unfolded between former Reserve Bank of India (RBI) Governor Raghuram Rajan and former Prime Minister Manmohan Singh on one end and Ms. Sitharaman at the other.

Responding toMr. Singh’s comments that Ms. Sitharaman ought not to blame the UPA for the state of the economy (the April–June quarter registered a growth rate of about 5%), Ms. Sitharaman told Indian media in Washington DC that she had to discuss the UPA to provide context for today’s situation.

Mr. Singh’s comments were in response to Ms. Sitharaman saying at the Columbia University on Thursday that public sector banks had gone through their “worst phase” during the tenures of Mr. Singh and Mr. Rajan.

“I don’t need to put the blame — it’s more than apparent as to when the wrongdoings happened in the banks and which is the government which is spending time to clear the clog from the public sector banks and which is the government which is pursuing all those who have taken money during the UPA government and who have gone out to the country for fear,” Ms. Sitharaman said.

Faced with a severe slowing down in the economy, including across key sectors, a slump in investment, consumption and exports, Ms. Sitharaman had announced a slew of policies – including a cut in corporate tax rates, a rollback in higher surcharges on foreign portfolio investors.

The revenue losses from some of the policies have raised questions on whether the government can stick to its fiscal deficit target of 3.3% of the GDP. Ms. Sitharaman said she was not focussing on the target for now.

The Minister sounded optimistic about achieving the target of ₹1,05,000 crore disinvestment target the government had announced for FY20 in its June 2019 budget.

“ I’m clear that the DIPAM [Department of Investment and Public Asset Management] is going ahead with everything that has been targeted and there’s enough momentum gained by the response that we’ve received for the IRCTC [a catering subsidiary of Indian Railways whose shares recently had a successful IPO] . That’s not really completely ‘disinvestment’, but then the way in which it went about has shown clear indication that the market is ready for it.”

In terms of the engagement with the U.S., Ms. Sitharaman is scheduled to meet Treasury Secretary Steven Mnuchin who will be in India in the first week of November for a financial dialogue. Mr. Mnuchin is also expected to visit Mumbai.

On India-U.S. trade talks, Ms. Sitharaman said differences between the sides were narrowing.

“I know the intensity with which the negotiations are going on and the few issues on which …some differences are being sorted out,” she said, adding that she hoped a trade deal would be reached soon.

The two sides are continuing to hammer out an agreement after having failed to reach a trade package during Prime Minister Modi’s visit to the U.S. in late September.

(With agency inputs)