Raghuram Rajan: India better prepared to deal with US Fed tapering, but vigilance must

Feb 05 2014, 13:50 IST
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Reserve Bank Governor Raghuram Rajan says India is better prepared to deal with any further US Fed tapering. Reserve Bank Governor Raghuram Rajan says India is better prepared to deal with any further US Fed tapering.
SummaryRaghuram Rajan also said the new US Fed chief Janet Yellen is very experienced.

India is better prepared to deal with any further US Fed tapering, but the country needs to remain vigilant to face eventualities, Reserve Bank Governor Raghuram Rajan said here today.

"We have done a lot to make the economy robust and we are better prepared (to deal with impact of tapering). (But) I will never say we are fully prepared for any eventuality. We have to be vigilant.

"We are better prepared certainly now than we were six months ago and that is because of hard work by the government as well as regulators," Raghuram Rajan told reporters after the FSDC meeting.

Finance Minister P Chidambaram had chaired the full meeting of the Financial Stability and Development Council (FSDC) comprising all financial sector regulators.

The meeting took place against the backdrop of tapering of Quantitative Easing (QE) in the US, and the Reserve Bank revising the current financial year's growth projection to less than 5 per cent.

Last week, the US Federal Reserve decided to cut its bond purchases further by another USD 10 billion. It has decided to purchase USD 65 billion per month of mortgage backed securities and longer-term treasury securities as against USD 75 billion per month earlier.

Raghuram Rajan also said the new US Federal Reserve chief Janet Yellen is a very experienced central banker.

"I have full faith that she will do whatever is appropriate and she will be very reliable central banker," the Governor said.

Referring to the FSDC meeting, he said the government and regulators discussed a broad set of issues facing the economy and decided to move forward on some of issues, including non-performing assets.

"As and when the precise measures (on NPAs) are determined, we will obviously announce them," Raghuram Rajan added.

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