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Bhubaneswar, May 21: Reserve Bank of India (RB) Governor Raghuram Rajan Saturday said Indian economy is now in a lot better position than it was in 2013 on account of many policy measures taken up by the central bank. Indian economy was in a tight spot during 2013 due to large current account deficit, leading to sharp depreciation of rupee which touched a record low of 68.85 per dollar in August, 2013. Soon after taking over the mantle of Reserve Bank, Rajan has taken slew of measures to bridge the gap in current account, resulting in a largely stable currency.
“When it comes to inflow of funds through international borrowings, we emphasised on controlled inflow, which can ensure long term assistance over those funds which don’t have any intention of long-term cooperation. And, now we are in a better position compared to the vulnerable economy of 2013 and of earlier years,” Rajan said. The RBI Governor was speaking at the 27th Mahtab Memorial Lecture held in the city amid a large gathering of policy makers, students, bureaucrats and others. In his 57-minute speech, Rajan discussed about the global economy along with the role of central banks in present global economic scenario.
“Central banks, in many countries, are often confined to look into their internal matters and bother less about the issues affecting global economy. They need to talk more about issues relating to global monetary policies affecting all. This could include studies, discussions at the international levels and others,” he added. Rajan also said that despite innovations in different fields, issues related to productivity are grappling the economy. “Despite numerous innovations, the benefits are not transforming into tangible results. The reasons responsible for this include the inability to monetise innovations, under-estimation of growth and oligopoly.”
He said structural reforms are needed to tackle these issues. “There are a number of initiatives through which structural reforms could be taken. We need to promote more competition to tackle oligopoly, more participation of women and marginalized sections of the society into the workforce.” In his speech, Rajan also talked in detail about the issues relating to industrial and emerging economies. He also cited examples of some industrial economies where cutting interest rates led to more savings against the general perception that low interest rates could led to more investments by the public. Commenting on ‘Make in India’ campaign, Rajan said it is always a better idea to make products in India but if the foreign markets do not give expected response, efforts should be made to sell those products in the country itself.
