Terming the belief in corporate India that the Reserve Bank of India is not concerned about growth as a “misconception,” Governor Raghuram Rajan came down heavily on them and suggested that the corporates should instead manage their risk profiles better.
The RBI Governor said, “I think it is very short-sighted when people comment that you are not helping growth this quarter. We are not talking about quarters, we are talking about years of sustainable growth. In order to get that, you have to fight inflation, beat it, and then you can get the sustainable growth. I think that is a message that needs to seep through.”
Rajan said corporate India should not blame the RBI for the higher borrowing costs in the market.
“The immense risk premium that is being demanded of some corporates because of the state of their leverage, the risks they have taken, and their unwillingness or their inability to repay should not be attributed to the RBI,” Rajan added.
He pointed out that in any case, the transmission of the policy happens with a lag of three-four quarters.
“If you are investing, are you bothered about interest rates this quarter?” he asked.
He added that by bringing down expectations of inflation, the bond yields have come down by 60-70 basis points since July. “That is a fall in borrowing rates. Short-term rates have come down. These are the positives for corporate India,” he said.