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Reserve Bank of India’s new Governor Raghuram Rajan has started off with big-bang reforms. Driving optimism in his first speech, Rajan said that RBI has proposed a bunch of reforms which he has every intention to implement.
“I think there are so many low-hanging fruits in the economy that if we only pluck them, we can accelerate growth substantially. Also, there are some positive developments in the economy going forward which will also help, for example the monsoon, but I think we need not sit still.”
Postponing the mid-quarter monetary policy to September 20 from September 17 earlier, Rajan said the Fed’s announcement is important but it is not the only international development. But the central bank will monitor all developments including domestic while making the policy.
Amid the recent downgrade threat by rating agencies, the former government man said, “As far as I understand, S&P has nearly reiterated its previous stand. That is something to do with what we are and not new. I wouldn’t read too much into that statement.”
He said: “We have to be careful about not injecting, more uncertainty in the economy than it can handle. So we have to handle it in a measured way.”
Promoters owning stake
On the promoters owning stake, Rajan reiterated the popular stand that equity has to come from the promoter and cannot come from the bank. “There has to be risk absorption capital. Hence, overtime we have to make sure more equity comes from the promoter,” he said.
On big reforms and implementation, the new RBI chief said: “Absolutely, there is a plan and it is being followed and we hope that what we intend to do in the next three months is very clear. We will implement in the next few months and some of these will be done in the next few weeks…There is no question that it will be implemented.”
On the risks associated, he said: “We haven’t seen the full consequences of the changes, which is true of any change. We have deliberately brought the changes that we have proposed.... So that says that we are comfortable and not taking undue risks.”
Though the RBI chief said his job is “not meant to win votes or Facebook ‘Likes’’’, his first day will definitely bring some cheer to the market sentiments.
Beena.parmar@thehindu.co.in
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