Raghuram Rajan’s tandava spells death for economy

Raghuram Rajan’s tandava spells death for economy

This article was published two years back. Please read my online comments posted then:

Leaving aside the near personal comments against Dr Raghuram Rajan, resorted to, perhaps, to impress the reader about the author’s proximity to Dr Rajan’s alma meter, let us look at the
issues raised. The base rates announced by RBI takes time to make any impact on
the deposit/lending rates of banks in India. Economic growth has always been a
concern factored in in Monetary Policy announcements. Interest rates in India
are not comparable to those in developed countries like US where need to manage
inflation is not much. RBI is dependent on GOI’s fiscal policy on getting the
environment congenial for implementing a Monetary Policy which the central bank
considers appropriate. Partly the lament in the article betrays the huge
expectations from Dr Rajan about listening to the capitalist voice. Where one
can dispute the growth rate in employment, Indian industry, viewed from any
other growth parameter has not suffered. Last quarter major companies in India have
posted better results. Indian companies, generally, have not been very keen in
increasing the numbers on their pay rolls.

M G Warrier


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