1. India should resist being too ambitious about growth: RBI Guv Raghuram Rajan

India should resist being too ambitious about growth: RBI Guv Raghuram Rajan

RBI Governor Raghuram Rajan has said India should restrain itself from being "too ambitious" at a time when the world is full of uncertainties and instead focus on sensible policies...

By: | Mumbai | Published: May 22, 2016 10:24 PM
Raghuram Rajan - Subramanian Swamy Raghuram Rajan said the world is growing “extremely slowly”, with the factors differing from one country to other and termed notions of a de-coupling of growth between industrial countries and emerging markets as “illusory”. (Reuters)

RBI Governor Raghuram Rajan has said India should restrain itself from being “too ambitious” at a time when the world is full of uncertainties and instead focus on sensible policies to ensure a sustainable economic growth.

“Given great uncertainty about outlook and policies of others in these times, a country like India should try to take sensible measures without getting too ambitious, as we have done so far,” Rajan said, delivering the Mahtab Memorial Lecture in Bhubaneswar late last evening.

“This will serve as a sound basis for strong and sustainable Indian growth as the world economy picks up,” Rajan, whose remarks comparing the Indian economy with an one-eyed king in a blind world led to a controversy, added.

The Indian government has been working hard to fasten the GDP growth and aspiring to take it to the double-digit mark from the current 7.5 per cent in the medium term.

It has, however, adhered to key targets like the fiscal deficit number and also made inflation-targeting a key objective for the central bank.

Rajan said the world is growing “extremely slowly”, with the factors differing from one country to other and termed notions of a de-coupling of growth between industrial countries and emerging markets as “illusory”.

“Easy and unconventional monetary policy in industrial countries could increasingly be a part of the problem,” the academic-turned-central banker said and reiterated this creates problems around capital flows for emerging markets.

He called central banks around the world to “start thinking more internationally” and stressed on the need to “start discussing new rules of the monetary policy game in the international setting.”

As such a goal will take years, an emerging country like India should focus on macro-stabilisation, building buffers and reducing vulnerabilities, Rajan said.

“Good policy is the first line of defence – including our focus on controlling fiscal deficits, reforms like the Bankruptcy Code and Aadhaar, and our steady fight against inflation,” he added.

The country has also taken other additional measures like control inflows, intervening in the foreign exchange market as a macro prudential measure to reduce volatility, and maintaining sufficient foreign exchange reserves to be able to withstand a sudden stop in capital inflows, Rajan said.

  1. M
    Manoj
    May 22, 2016 at 8:56 pm
    Please dont try to justify driving with the handbrakes on. Despite all the caution, why nothing was done to haul up recklessly lending bankers, plough back higher earnings into NPA reduction. Every area that previous RBI governors used to manage, quietly, is now done by a new committee, and all that Rajan does is make speeches.
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  2. S
    sandeep shah
    May 23, 2016 at 3:11 am
    always negative statements, he is not at all optimistic. nor he is not at all better then rangarajan or jalan his former governor. we all fascinated by negative news all the time particularly media so we give importance. give me one incidence where he gone right .... people lost money just because of him wrong prediction of 11 lac cr bad loan in jan..16... which is not fact out of 46 lac cr psu banks loan..... even he was right after 4 year in sub prime case... even not working watch show correct time twice a day,,,,, he is only rbi governor against whom supreme court p comment 3 times.... no one should get more impotence then nation..... read he is not working.....he was economic advisor to pmo when all this loan disburse.....
    Reply
  3. S
    Subramanian Venkatraman
    May 23, 2016 at 2:04 am
    If you want to climb the Everest you should always have its crown in your view though you will be climbing step by step. There will always be problems, but the wise keep on moving up with focus on their steps without harping too much upon difficulties involved. We have a very vocal opposition to keep the brakes on more than necessary. If Rajan gives more fodder to them and authenticates their fear mongering, may be it is time PM lets him go.
    Reply

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