After Raghuram Rajan slammed Modi’s foreign bond plan, CEA Subramanian says will consider his points

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Updated: July 17, 2019 12:35:45 PM

Days after former RBI Governor Raghuram Rajan raised doubts over the government’s recently-proposed overseas debt plan, Chief Economic Advisor (CEA) Krishnamurthy Subramanian said that the points raised by the former would surely be taken into account.

Govt to take into account risks associated with sovereign bonds: CEAThe ex-central bank chief, in  a recent column in a national daily, had said that the proposed plan to raise funds overseas through sovereign bonds has no real benefit even as it is loaded with risks.

Days after former RBI Governor Raghuram Rajan raised doubts over the government’s recently-proposed overseas debt plan, Chief Economic Advisor (CEA) Krishnamurthy Subramanian said that the points raised by former would surely be taken into account. The benefits outweigh the costs in sovereign bonds issue, but the government is aware about the costs as well, he also said at an event organised by CNBC TV18, marking two years of GST. The ex-central bank chief, in  a recent column in a national daily, had said that the proposed plan to raise funds overseas through sovereign bonds has no real benefit even as it is loaded with risks.

Finance Minister Nirmala Sitharaman, in the budget announced earlier this month, had proposed to raise funds through the overseas issue of sovereign bonds, crediting low external debt to GDP ratio as an encouraging factor. The proposal would further be discussed by the RBI and the government by September.

Even former RBI Deputy Governor Rakesh Mohan had proposed that the foreign bond sale was a ‘dangerous move’, CNBC TV18 has reported.

Policy making

Speaking further, Krishnamurthy Subramanian also said that emphasis should be on the investments and productivity so as to boost growth. He also said that there is a need to have policy-making that responds in real time in today’s uncertain world. Adding, he said that focus should be on domestic front to achieve the $5 trillion economy target and MSMEs would play an important driver of exports and jobs worldwide.

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Interest rates

The current interest rate environment is an opportunity that comes once in a while, the noted economist also said at the event held to mark two years of GST. There is a need to have a fiscal and monetary policy framework that keeps the economy within needed bounce, he added.

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