.......It’s good to see that Rajan is talking about skill upgradation and certification of the RBI staff and of the entities RBI regulates. But he needs to go much further than just consolidating instructions, getting bankers certified and issuing fresh guidelines. There is an urgent need to see the rot in the bank branches and the harm that toxic retail financial products are doing to households that have been tricked into investing in them by their bankers...........
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Wednesday, October 30, 2013
The RBI tweaks it right - A.Seshan
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| The option of living with inflation is no longer seen as an option |
............The Reserve Bank of India should be congratulated for coming out with a realistic policy review supported by a document that leaves no illusion in the minds of the readers as to the state of the economy. It has brought down the estimate of the growth rate of the economy to 5.0 per cent and raised the projected consumer inflation to 9 per cent..................
RBI's overdrive to tame inflation may backfire - Charan Singh
The limits of star power
.......The central bank governor can't sort out the trade deficit, the fiscal deficit or the lagging education system. These are among the persistent issues that have plagued India's growth. But, a central bank governor can inspire confidence that he can manage financial stability and has the tools to address a potential crisis. So far, it looks like Mr Rajan has done a lot in just two months. But, can he prevent a crisis? And will the Rajan rally last?............
Rajan toes the Subbarao line
Rajan does a Subbarao, sacrifices growth to control inflation
.....But the second quarter policy has nothing in it to help revive growth. Rajan is following his predecessor, D Subbarao’s footsteps in fighting inflation and sacrificing growth. We very well know where this policy landed us. For that, we will have to wait for his development policies to be unveiled. Till then we will continue to move with the governor’s foot on the brake pedal...........
Finance ministry remains silent on RBI's actions
......In the past the finance ministry had openly expressed its displeasure over repo rate increase or status quo maintained by the then RBI governor D Subbarao but the official said now the priorities have changed and finance ministry also realizes that taming inflation is also important along with GDP growth.............
Rangarajan differs with RBI on inflation projection
.............."Well I think the inflation rate may not be as high as (RBI) report seems to suggest. I would really think as far as WPI is concerned, it will be around 5.5 to 6%. I don't think that it will exceed 6%...I expect the WPI as well as CPI to remain at slightly lower level than indicated," ........
Maturing with Rajan
Saving the Rupee: 10 questions for Raghuram Rajan
........To anybody who understood even the very basic tenets of Austrian Economics, it was amply evident that the previous two RBI Governors, Reddy and Subba Rao, were running highly inflationary policies at the behest of their political masters. But the financial media being filled with people who probably haven’t even heard of Austrian Economics, were very dutiful in paying encomiums to these RBI governors. If anything, they were out-competing in complimenting them. Not only did the previous two RBI Governors debase the Indian currency enormously and continuously over their tenures, their understanding of basic economics in itself was highly questionable..........
Read...................
IS GOVERNOR RAJAN SHYING AWAY FROM COMMITMENT?
........What is of surprise is the lack of clear - cut commitment on important macroeconomic issues -- growth and inflation. It was expected that Raghuram Rajan would follow the central bank governor’s ‘ Dharma’ of anchoring inflation expectations. With just a mention of both rising WPI and CPI, it is unclear what the R B I Governor wishes to focus on...........
RBI rate hike: Will North block mandarins get Rajan’s message?
Rajan unveils ‘five pillars’ to strengthen banking system
Reserve Bank of India Governor Raghuram Rajan on Tuesday unveiled his five-point plan to overhaul the RBI's developmental measures over the next few quarters. The first of the "five pillars" of the plan is clarifying and strengthening the monetary policy framework..............
5% GDP growth wishful thinking; trajectory at around 4.5%
........On 29th October, we have been told what RBI itself thinks. There is a confidence interval, but RBI expects 5% for the full year. If you look at the latest round of projections, everyone outside the government expects growth at less than 5%. Finance Ministry expects 5 to 5.5% (at the time of the budget, talk was of 6.7%) and Prime Minister’s Economic Advisory Council expects 5.3%. To show its independence from government, RBI is borderline at 5%. In Q1 we had 4.4%, say 4.5%. Q2 is over..................
Read - ET
Rajan cuts to the chase
If simplicity is the greatest form of sophistication, Raghuram Rajan has been doing just that by making small and nuanced changes in the policy document, to the delight of seasoned policy watchers and even those who are trying to de-code it for the first time. Rajan's intention of presenting a clear and precise policy document that clearly lays out the road map for future monetary actions builds on the policy framework he outlined when he took charge of the governor's office.......
Why higher interest rates may eventually be good for growth
.......The stock of financial savings by households has almost been stagnant in recent years because of the shift to real estate and gold—which means that Indian companies could face borrowing constraints when the economic cycle turns. Higher real interest rates on financial assets are a useful way to convince ordinary Indian savers to move money back into the banking system, as inflation comes down and nominal interest rates rise......
Costly mistake
What Raghuram Rajan said on onions
Reserve Bank of India (RBI) Governor Raghuram Rajan may not have been expecting a pointed question on onion prices during the press interaction post the central bank's second quarter monetary policy review, where it hiked repo rate- the rate at which it lends short term money to banks by 0.25 per cent, but the question did come up...........
Why Raghuram Rajan needs to call Sachin Pilot, the minister of corporate affairs
................However, much contrary to the RBI’s intent of encouraging the bond market, the scope for non-banking non-financial companies to issue corporate bonds is almost completely dried up, with the rules for the public deposits, draft of which was unveiled by the Ministry of Corporate Affairs recently. For those who are wondering as to why public deposit rules affect corporate bonds, it must be understood that in India, public deposits include corporate bonds too, unless the bonds fall in one of the exempted categories.........
RBI policy: Rajan’s war on inflation signals UPA’s death knell
.........The RBI’s policy agenda is amply clear. After two successive rate hikes in less than two months since Rajan took over as Governor, he has signalled his hawkish intent to beat down inflation even if it means sacrificing growth. The bad news for the government is that Rajan’s hammer (interest rates) will only have a limited impact on inflation..............
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