World Bank president lauds Rajan

Hopes country will ensure independently functioning RBI

World Bank President Jim Yong Kim (pictured) termed Raghuram Rajan a great central bank governor and hoped this country would continue to ensure an independent Reserve Bank (RBI) head. The government, meanwhile, argued for improvement of India’s position in the ‘Ease of Doing Business’ ranking by the Bank, from the current 130 of a total of 189 countries

Kim also said the Indian economy was resilient, even as it would become difficult for developing economies to access capital after the ‘Brexit’ (British vote to leave the European Union) development.  “He (Rajan) is so well respected. I think he has done a great job,” Kim, here on a two-day visit, told reporters at the India office of the Bank.

On Rajan’s exit, he said he did not know the entire story. “I understand he is going back to academia. He is an extremely respected and productive scholar, in addition to being a great central bank governor.”

Rajan on June 18 had announced he’d return to academia when his three-year term as RBI governor ended on September 4, ending uncertainty about his continuation.

On Prime Minister Narendra Modi, the Bank head said he was a “big fan” and hoped the government would continue with the policy of having an independent central bank. “I think the Modi government has made it clear that they will continue with (this) important principle,” he said.

Jim, who met Modi earlier in the day said, many things had been said that confirmed his opinion that the Rajan-centred controversy was not about a single person but about certain principles and practices to be adhered to. “I don’t expect there will be a major shift because the principles of an independent central bank, someone who is respected, I think will continue.”

Beside Modi, the Bank president met finance minister Arun Jaitley, power minister Piyush Goyal and commerce minister Nirmala Sitharaman. And, discussed ways to increase funding in various projects, especially renewable energy.

”There is a pipeline of projects in India, which needs a lot of developmental finance,\” said Jaitley, adding the Bank had been in the forefront on assisting in those programmes.

”With regard to the Ease of Doing Business ranking, we have given our viewpoint. Their (Bank’s) teams will separately be coming to India, to assess the progress we made in this regard,\” Jaitley said.

As mentioned earlier, India ranks 130th of 189 economies on the World Bank’s Doing Business report, topped by Singapore as the easiest country to do business. Though India has moved four places up from the earlier listing, it ranks way below China, which is 84th.

Jim said Britain’s decision to quit the EU would lead to uncertainty. \”We don’t know what will happen. Money will move to safe havens like gold,\” he said.

However, he said, India was among the fastest growing countries. \”Inflation is down, growth is up, balance of payments is in better shape.\”

Kim said the Bank’s lending had gone up tremendously over the past two years to over $5 billion to India and that would continue for the next few years. \”India’s (annual) growth that is now at 7.6 per cent is a true bright spot and one of the few bright spots in the global economy,\” he said, adding the country could be a lesson for developing and even developed countries.