Apropos of the news story Guv Rajan launches financial reforms 2.0 (FE, September 5), Raghuram Rajan's induction as the new RBI Governor at a particularly difficult period of the Indian economy is quite timely. The economist who predicted the 2008 recession in 2005, it is hoped, will successfully anchor the boat of the Indian economy in the turbulence. Rajan is matching his visions of rupee's globalisation in the coming days and liberalisation of capital accounts with realistic steps. His announcements on his first day on the job regarding new bank branches, new bank licences by January 14, niche and differentiated banks, tough stand on NPAs of banks, raising limit of overseas borrowing limit for banks to 100% for tier-1 capitals, CPI linked inflation bonds as substitute for gold, deepening capital markets, etc deserve compliments. To increase the rate of cancelled forward contract to 50% for export and 25% for import will boost forex trade. One has to be optimistic that Rajan's efforts will yield necessary impetus to the Indian economy. The ruling government should desist from influencing RBI's independent identity.
After a long wait, the Pension Fund Regulatory and Development Authority Bill has finally got approval in the Lok Sabha. It is a step in the right direction, and will help create a modern pension system with a statutory regulator. It will allow the setting up of companies that can offer pension, as well as 26% foreign direct investment in the sector. The Pension Bill was one of the key financial sector reforms beset by political differences. The government and opposition have done the public a great favour by coming together to pass this Bill.