1. Raghuram Rajan says he doesn’t see debt management agency clipping RBI wings

Raghuram Rajan says he doesn’t see debt management agency clipping RBI wings

Reserve Bank Governor Raghuram Rajan today said he is not worried about the proposed Public Debt Management Agency...

By: | New Delhi | Published: March 4, 2015 8:49 PM

Reserve Bank Governor Raghuram Rajan today said he is not worried about the proposed Public Debt Management Agency (PDMA) and possibility of the apex bank losing its powers after the new body comes into existence.

“There are indeed some clauses in the Finance Bill referring to this (PDMA), but the Finance Minister’s speech did not contain any reference to this.

“The speech generally flags important action of the Government. I am not worried that this (RBI powers will be clipped) will happen,” he told analyst in conference call after he surprisingly cut repo rate by 25 bps to 7.5 per cent.

He said the formation of PDMA is a work in progress and will take some time to take shape. “My sense is that when it finally emerges, it will have a lot of RBI presence and support to avoid the reinventing the wheel.”

Rajan said the notion about the agency is that it will be independent and won’t suffer from conflict of interests. “I have said in the past that these issues of conflict of interests are probably not the most important things now.”

To a specific question over separately announcing the auction of government cash balances, Rajan said the RBI has to examine the concerns of the Centre in revealing the precise level of cash balances.

“There are day-to-day concerns about whether we should make it public. This is a subject matter which is being discussed and let us see what happens. We have tried to give as much transparency on this as possible right now. But if there is a possibility of giving more transparency, we will discuss with the government and see how we can do it.”

Talking about the Budget, Rajan said there are lots of plans and intents in the key document and the RBI is going to watch how they are rolled out.

“I have no doubt that various medium-term measures proposed in the Budget will certainly help the country become more of a powerhouse in the world. From that perspective, it is a very good Budget.”

On how is the RBI looking at the ‘Make in India’ campaign and make for India that he suggested, Rajan said, “I don’t think this is a real debate between Make in India or make for India. You are making in India, you will make for India and make for the outside world.

“I don’t think they are one against the other and both can co-exist. Given that our exports are always a small fraction of domestic production, you can go for making for India. I don’t see any contradiction between these two.”

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