Raghuram Rajan ignores snap judgements

Mumbai: The Reserve Bank governor Raghuram Rajan  who has just 28 days more as governor, said he did not mind “snap judgements’ by critics and support. “What is important is that you feel you made an important contribution and I think I have done a fantastic job,” the outgoing RBI governor said.

Dr Rajan said that he had “enjoyed every min-ute and everyday as we met, we managed to move the needle a little more forward. There are few places where this could happen.”

Hoping that “there was some value added”,  he said, “What matters is how these measures play out in the longer run for stronger and sustainable growth for the country, for employment creation, movement into a middle income country and these will be seen in five to six years.”  

Asked at his post-credit policy announcement pre-ss meet what he thought of criticism of his stance on inflation by BJP MP Subr-amaniam Swamy., Dr Rajan said, “You have to take it.”

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.”
Dr Rajan, however, strongly defended his controversial public speeches as “perfectly legitimate” ones within the remit of a central bank head and asserted that he was never critical of the government in any instance.

“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. There are people who read the interpretation of what is the speech I have given,” he added.

“Some of those speeches have been on economic issues but outside the monetary policy. But those economic issues are perfectly within the remit of the central bank because ultimately we have a remit of macrostability,” he said.
Asked what he thought of reporters contacting his parents who live in Chennai, he said “They contacted my father and he spoke to them. It is not right to go after families.”

On  his plans going forward, particularly since he had said that people will see a lot of him in India, Mr Rajan said “I will go back to my previous employment where I work at the University of Chicago.” In India, he said  he was associated with the Indian School of Business (IBS) and was involved in a lot of Indian courses.

GST’s inflation impact is negligible: Rajan

RBI on Tuesday said that the effect of the GST on inflation is likely to be very limited as 55 per cent of consumer price index (CPI) basket is out of its purview.
While it is still too premature to estimate the pressure on inflation on account of the implementation of GST as the rates are yet to be fixed, RBI believes such inflation would be short lived.

“One of the benefit of GST is that the cascading effect disappears. So the effective rate of tax on various goods and services would come down. As the base expands, we would not require a higher tax rate. Even if there were an impact on inflation, it would be a one-time price adjustment. Since a large part of the CPI basket is out of GST’s ambit, I think the durable impact on inflation is likely to be limited,” said Urijit Patel, deputy governor, RBI.

According to him, any impact on inflati-on on account of GST could be felt only during the second half of the next financial year. Citing the example of Malaysia, which adop-ted similar tax, Dr Rajan said, “There was an inflationary imp-act, but it was short lived. What is important to look at is whether there is one- time price adjustment, which doesn’t lead to generalise inflation. A lot depends on which price goes up and which price comes down,” he added.