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RBI guv Raghuram Rajan spikes single data point as fulcrum for next move

Nov 15 2013, 18:26 IST
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We await data to see how certain forces play out: Raghuram Rajan Reuters photo We await data to see how certain forces play out: Raghuram Rajan Reuters photo
SummaryRaghuram Rajan said demand needs to be reduced without having severe effects on investment, supply.

The Reserve Bank of India (RBI) Governor Raghuram Rajan said on Friday that no single data point or number will determine the central bank's next move on managing India's high inflation.

Raghuram Rajan said that demand needs to be reduced without having severe effects on investment and supply.

"This is a balancing act, which requires the Reserve Bank to act firmly so that the economy is disinflating, even while allowing the weak economy more time than one would normally allow for it to reach a comfortable level of inflation," he said in a speech.

"The weak state of the economy, as well as the good Kharif (summer) and Rabi (winter) harvest, will generate disinflationary forces that will help, and we await data to see how these forces are playing out. No single data point or number will determine our next move," Raghuram Rajan said.

The RBI at its last meeting raised its policy repo rate by 25 basis points to 7.75 percent citing persistent inflationary pressures.

Cynicism slowing down decision making process: RBI Governor

(PTI) Reserve Bank Governor Raghuram Rajan today called for purposeful and effective action to counter the atmosphere of cynicism, which has slowed down the decision making process, and to tap growth opportunities

"We are going through a period of great cynicism about what India can do. That cynicism does not just permeate the foreign press and their audiences, but also infects our domestic debate. Every policy is greeted with suspicion and scrutinised for evidence of malfeasance.

"With no upside to making decisions, it is no wonder that decision making has slowed. The solution, however, cannot come through inaction but through action, action that is, and is seen to be, purposeful, unbiased, and effective," he said while addressing the BANCON 2013 here.

He further said that there would be mistakes, but if the weight of clean actions builds up, the suspicion that pervades in the society will ebb.

Referring to five pillars of the financial sector policy of the central bank, Rajan said in the next few weeks measures will be announced to incentivise banks for early detection of bad loans and better resolution and fair recovery of non-performing assets.

For the benefit of customers, he said the RBI has set up committees, like the B Sambamurthy Committee, to advise it on how to expand mobile banking in India through encrypted SMS-based funds transfer in any type of handset.

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