The verbal jousting continues between former governor of India’s central bank Raghuram Rajan and Finance Minister Nirmala Sitharaman over the current poor state of the economy.

In response to the minister’s recent remark that Rajan had presided over the worst phase of Indian banking, he reminded Sitharaman that two-thirds of his tenure as Reserve Bank of India governor was spent under Narendra Modi-led National Democratic Alliance government.

He was the governor from September 5, 2013 to September 2016.”I had just over eight months in the previous (Congress) government and I had 26 months under this (BJP) Government. So much of my term (as RBI Governor) was under this government,” he told TV news channel CNBC in an interview.

During her visit to Columbia University in the US nearly a fortnight ago, Sitharaman attacked Rajan when she was asked to comment on his observation that Narendra Modi-led government had not done better on the economy front because it is extremely centralized and the leadership does not appear to have a consistent articulated vision on how to achieve economic growth.

She retorted that there were major issues with bank loans during Rajan’s tenure as the central bank head. “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,” Sitharaman said.

“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.”

To Rajan, she was missing the point. Barely a month after Rajan’s tenure ended, Prime Minister Modi in a nationwide TV address on November 8, 2016, announced the controversial demonetization of high-value currency notes. This affected over 86% of India’s currency that was in circulation at that time.

Rajan has been an ardent critic of this step and has reiterated time and again that it badly hurt India’s growth story.

Rajan claimed that during his tenure a cleanup of bad loans in the banking sector had begun, but the job remains unfinished. He hastened to insist that he doesn’t want to get into a political debate on the issue.

“Let me not get into a political back and forth. The reality is, there is a clean-up which we started, which is underway, which needs to be completed fast. The recapitalization has been done, but it also has to be done in the non-bank financial sector” – where some institutions may cease to exist – “and you need to clean up, get the financial system going again if you want stronger growth,” he added.

In his response, however, Rajan said the seeds of problems were sown in “euphoria” that preceded the 2008 global financial crisis. “A lot of investments were made and those slowed down. Those created the bad loans which we needed to clean up. And we started the process of cleaning up,” he said.

“There are people who say why did we clean up, we could have gone on. We simply couldn’t have gone on because banks were stopping lending because their balance sheets were getting clogged with non-performing loans. So, you had to force the reorganization and recapitalization to set them back on track.” That job, he said, is “half-finished right now.”

“It has to be finished,” he said. “Now, could it have been done faster, absolutely. We needed to do it faster but we are where we are. We need to clean up but also clean up new risks that have emerged for example in the non-bank financial system. If we don’t do, the financial system is going to be an overhang over the economy.”

As for non-banks, the shadow banking crisis last year led to the collapse of market leader Infrastructure Leasing & Financial Services Limited and the contagion later spread to other players such as Dewan Housing Finance Limited and Indiabulls. They continue to face liquidity squeeze and many of them have been downgraded drastically by rating agencies.

On economic growth, Rajan said the country is witnessing a substantial slowdown. “The peak in 2016 was 9% growth in one of the quarters, in the first quarter, now it is down to 5%. There are people who have raised a concern about whether 5 is really 5. The reality is there has been a substantial slowdown,” he said. “I think 5 is bad enough. So, you have to do something about it because 5 doesn’t get jobs, given we are adding 1 million people to the workforce every month.”

He concluded: “India needs far stronger growth but it is not going to come from tinkering. It really needs another generation of reforms. Good news, the government has political strength and the power to undertake those reforms. Bad news, [it] hasn’t done so so far.”