Raghuram Rajan digs into bank NPAs, jobless growth as moderator

Written by ENS Economic Bureau | New Delhi | Updated: Mar 29 2014, 23:49pm hrs
Raghuram RajanRBI Governor Raghuram Rajan attends a seminar organised by the University of Chicago in New Delhi. (Reuters)
Reserve Bank of India (RBI) Governor Raghuram Rajan moderated a panel discussion on Friday, just 48 hours before releasing the first quarter monetary policy.

He did not give any indication about how the rates would move on Monday, but managed to touch on most key issues concerning the Indian economy and some beyond.

Rajan told the gathering facing the panel assembled for the opening of the University of Chicagos Delhi centre that he will take no questions.

Also read: RBI policy: HSBC, RBS see Raghuram Rajan leaving key rates unchanged on April 1

He kept to his promise, but even as he did so he got the panel to discuss the level of non-performing assets (NPAs) in the Indian banking sector to the subject of jobless growth and the social tension which it creates.

The governor surprised ICICI Bank CEO and managing director Chanda Kochhar asking for her assessment about the level of NPAs in Indian banks, especially in the public sector. Rising NPAs in PSU banks are a concern. Especially in public sector, not in private banks, he said.

Also read: Raghuram Rajan unlikely to lower rates despite better inflation data: Analysts

Rajan will give his take on which way the bad loans are moving as a part of his credit policy.

Kochhar, in her reply, claimed that most of it will improve once the clearances for projects start to flow in. Rajan quipped, so you are saying there is no reason to believe that every bad loan is the cost of corruption.

He also raised the cost of jobless growth with Arun Maira, member Planning Commission. Rajan has written about the need to provide jobs for the low-skilled labour by amending the Apprentice Act in the Economic Survey for FY13. Maira said skill deficit is a big gap for the economy but the employers have to pitch in with investments to bridge some of that.

In a question to Randall Kroszner, professor of economics at the Booth School of Business in Chicago University, Rajan wanted to know if the migration of jobs to higher levels of skill is hollowing out the job market globally. And would redistribution of the economic pie help more if that happened

And on the Devyani Khobragade issue he asked Shobhana Bhartia, chairperson and editorial director of The Hindustan Times group, do you believe the foreign policy of the country should be kept out of the foreign ministry

Bhartia said the controversy got blown out of proportion particularly because the diplomatic corps decided to take it big.

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