Reserve Bank of India Governor Raghuram Rajan, who has in recent weeks come under attack for speaking out on India’s unfinished agenda, both cautioned and complimented the Central Government on Saturday.
“In a difficult world, we have macroeconomic stability; We look different,” Dr. Rajan said.
The government’s efforts at fiscal rectitude is among the factors that contributed to the changed scenario since 2013, he said.
Reforms happening‘Even if you don’t see the headline reform, the Goods and Services Tax happening, a lot of reform is happening, Dr. Rajan said.
He mentioned the Insolvency and Bankruptcy Code that is expected to be passed in the ongoing Parliament session among the initiatives that could spur investments and growth.
Capital inflowAt the same time, he cautioned against exaggerated interpretations of rising capital inflows as a sign of investor sentiment as “the flip side of capital inflows coming in is it tends to leave at some point.”
Dr. Rajan, who was delivering the 6th K. B. Lall Memorial Lecture here, two days after the Lok Sabha approved amendments to the RBI Act vesting the power to set interest rates in a six-member committee, also emphasised the perverse effects of low interest rates.
People don’t celebrate low interest rates, as they realise they will need more savings and pensions, the central bank Governor said.
