Modi has less than four weeks to pick a successor for Rajan, who announced his exit nearly two months ago following criticism of his policy decisions by a key ally of the prime minister.
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Outgoing RBI Governor Raghuram Rajan on Wednesday said that he has never been “worried about reappointment” or future prospects of having a “career in the government”. He said the RBI must remain vigilant for any signs of a price spiral, adding that there were factors which could bring down the pressure on prices in some time to come.
He recounted how during a flight people sitting in the rear of the plane would pass anonymous notes saying, “Thank you. You have done a good job”.
“These are perfectly legitimate speeches”. You can interpret them any which ways you want.
“In none of those speeches that I have made has there been an explicit criticism or an implicit criticism of the government. Great relationship with the previous government as well people who matter in this government”.
He said “easy liquidity conditions” and market competition should prompt banks to lower the rates, while announcing that changes are underway to the way banks decide their lending rates.
“The economic situation is improving and a further cut in policy rate at this juncture would have been well timed”, said Harshavardhan Neotia, President, FICCI.
“We believe transmission of rates will happen gradually over the next few months as credit growth picks up pace”, said Arundhati Bhattacharya, Chairman, State Bank of India.
Morgan Stanley’s Upasana Chachra and Chetan Ahya write that the RBI maintained its CPI inflation target of 5% by March of next year, with an upside bias, which shows the key risks to inflation from potential food prices and the impact of 7th central pay commission on inflation and inflation expectations. Earlier for example, I was involved with Indian School of Business. “In particular, the government’s notification of the inflation target at 4.0 percent and additional -2.0 percent through to 2021 denotes ongoing commitment to keeping inflation at moderate levels”, he added.
“One of the benefit of GST is that the cascading effect disappears”. The central bank expects the GST to “raise returns to investment across much of the economy” apart from helping government finances over the medium term. The experience of other countries, like Malaysia, has been that the inflationary impact was short lived. As the base expands, we would not require a higher tax rate. “However, given the sticky services sector inflation and a likely boost in rural consumption, the fall in headline inflation is unlikely to be drastic enough to encourage more than one policy rate cut in FY17”.
“I have enjoyed every minute of it, partly because every day when my fellow colleagues at the RBI and I, if we are at work, we manage to move the needle forward a little bit at the end of the day”.
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“At the core of the monetary policy, is the desire to see a sustainable growth rate along with empowering the banks to lend more at competitive rates”, Assocham Secretary General D.S. Rawat said. “A lot depends on which price goes up and which price comes down”, he added.
