RBI governor Raghuram Rajan calls for animal spirits

New Delhi: RBI governor Raghuram Rajan on Wednesday said that the economy is on the right track though “true numbers” of GDP could be one per cent up or down.

“I would hope that with good monsoon, strong rural demand, with more animal spirit and public investment picking up pace... I think with all that coming together there will be need for private investment,” Dr Rajan told in an interview to a TV channel.

“We have some way to go. I am not saying that economy is where it should be. We do have work to do. We can celebrate when we see private investment strongly back on track and I think we are capable of much stronger growth that we have right now,” said Dr Rajan, whose tenure comes to an end in September.
While investors and corporates are calling for extending Dr Rajan’s tenure, senior BJP leader Subramanian Swamy had created controversy by suggesting that Dr  Rajan should be removed from RBI governorship by accusing him of being responsible for “unemployment and collapse” of industrial activity.

Investors cautioned the government against allowing Dr Rajan to exit as it may lead some fixed income investors exit India — the risk which some people have started calling “Rexit” or Rajan’s exit, a play on Britain’s EU referendum.
Dr Rajan, however, refused to talk about his extension once again. “I cannot confirm or deny. As the FM has said, wait for the announcement. My tenure is till Septe-mber 4. So between now and then, the announcement will come,” he said.
On his relationship with ministers and other officials, Dr Rajan said: “It is extremely cordial. Whether its Mr Chidamb-aram (former finance minister), whether it is secretary to government, whether Mr Jaitley or whether it is anybody else. all conversations are respectful of each other’s position.”

Attributing only a few stray cases of bad loans to money changing and phone calls from politicians, the RBI governor said, there were variety of reasons including global slowdown, cessation in governance for sometime and irrational exuberance in some cases for the mounting non-performing assets.

“There were enough candidates to blame for what went wrong,” the RBI governor said. “My sense is that that has been largely done by this government. I think the Prime Minister said at Gyan Sangam two years back, intervention ie public programmes we will ask public sector banks to participate in, but no interference, no phone calls. By and large my sense is that it has diminished,” he added.