Rajan, who surprised everyone, by announcing his intention to return to academics after his tenure as the RBI governor ends in September, recently interacted with some journalists, and spoke on a wide range of issues from GDP growth to inflation and reforms.
Rajan also said that he has no immediate plans to write a tell-all book on his experiences were as the RBI governor. We take a look at 5 important things that he said:
1) Show me how inflation is “very low”: Rajan has asked his critics to show him how inflation is “very low”. Rajan has time and again been accused of being “behind the curve” with regards to his focus on inflation, at the cost of compromising on growth.
“This discussion keeps going on without any economic basis. You saw the CPI numbers just last week — 5.8 per cent is the CPI inflation, our policy rate is 6.5 per cent,” he said.
2) Performance of economy credible given global constraints: Rajan is of the opinion that while people are frustrated with the pace of economic recovery, external shocks like Brexit, weak global economy and two consecutive droughts have played a big role in weighing down the growth prospects.
Given these constraints, performance of Indian economy has been “quite creditable” and prospects of good monsoon as well as structural reforms and macroeconomic stability will accelerate the growth going forward, he feels.
3) Reforms and GST: There are talks of the crucial GST Bill being passed in the Monsoon session of Parliament. Rajan said that this would be a “good thing”. “The challenge is to strengthen the process (of economic recovery) by undertaking all the reforms that are needed,” he said.
4) Don’t “thump the table” on GDP growth: Rajan feels that there is a need to avoid fixation with a particular growth figure. Rajan said he has refrained from “thumping on the table” to put a number on GDP growth.
“Our last projection was 7.6 per cent and I think as the monsoon develops, as the global economy develops, clearly there will be changes in that. But I think we sometimes get overly fixated with a particular growth number — 7.6, 8, they are all within the same sort of range of numbers,” he said.
5) Banks can’t get ‘blanket relief’ from CBI, CVC: Bankers have expressed some concern that they should not be held liable for actions that are taken in the full spirit of what is needed, Rajan said, but he added that there cannot be any “blanket sort of relief.
“You can’t say that whatever actions you take no matter what their character, you should be absolved of any responsibility,” he said.