Reserve Bank Governor Raghuram Rajan today said Prime Minister Narendra Modi's emphasis on India being an economy which is trying to get it right does not fit well with incidents like that of love jihad and killings.
Reserve Bank Governor Raghuram Rajan today said Prime Minister Narendra Modi’s emphasis on India being an economy which is trying to get it right does not fit well with incidents like that of love jihad and killings.
“I think there are always issues on the fringe. I think that the Finance Minister has said very clearly that these tend to distract rather than contribute. And clearly these are certainly worrisome features which have to be dealt with on the basis of law and order and so on.
“The emphasis that Prime Minister and Finance Minister have been putting on this being an economy which is trying to get it right and move forward on sustainable basis. I think that does not fit well with these kinds of incidents. And we need to figure out the way to reduce and certainly, I think, there is law and order issue there,” he told India Today channel.
He was asked whether India’s image was being impacted on incidents like love jihad, conversion, ghar vapsi and the recent killings, an apparent reference to the murder of a man in Dadri in Uttar Pradesh over rumours of eating beef.
Replying to questions on his relationship with Finance Minister Arun Jaitley, Rajan said it “has been of the highest order ever since he moved into the office that was when I first met him.”
“It has been great. I think these reports of differences tend to exaggerate and sometime over-complicate what is essentially a very strong relationship,” he said.
He said the media tends to emphasise differences rather than the large areas of commonality under competitive pressure for news.
Asked if he was open to a second term after 11 months when his term comes to an end, he said it was a hypothetical question. “I have not been offered one. We will cross the bridge when we come to it.”
On his larger than expected 0.50 per cent cut in interest rate last week, Rajan said it was part of the process of getting investment.
Asked if the rate cut was enough to boost growth rate, he said, “The real deficiency in our economy today is private investment is not picking up as it should at this stage of the cycle. The key concern of policy maker is how to get it started. How we get it going.”
“We see some green-shoots also. Public investment has started picking up. Consumption in urban areas is starting to pick up, rural areas, perhaps if the eventual food production is reasonable, we may see some pick up. But the key missing factor is stronger and sustainable growth in private investment.”
He said the point that was one has to be careful about relying on one instrument for making one instrument the scapegoat for all problems in the economy.
“We need all instruments working at the same time to get the economy kicking and firing from where it is now,” he said.
Inflation, he said, will be below the RBI target of 6 per cent in January.
However, substantial inflationary pressure may be created if oil prices were to shoot up to USD 75-90 per barrel, warranting an increase in interest rates, he said.
“As of now, we don’t foresee any change in the monetary path right now,” he said.
On impact of deficient monsoon rains on inflation, he said the government has done a fair amount of work to ensure that some of the adverse effects of monsoon are mitigated. Also, global prices have remained relatively low for last couple of years.
“So some combination of government management and global prices, including the possibility of imports when necessary, I think will keep food inflation moderate. But thats an expectation. And of course we have to see how it pans out,” he said.
Rajan said in the recent past there were issues of governance and the experience of business with the government had not been good. And now the government has said it has come to change.
Asked whether India sees an opportunity in slowing of Chinese economy, he said no country’s adversity can be good news for another in a globalised world.
However, in the present circumstances the government can use the opportunity for attracting FDI. In general, global environment of weak demand is not good news for anybody, he said.