 "India fairly safe against global volatility, say Rajan")
With many economies in the world hit by the global volatility, Reserve Bank of India (RBI) Governor Raghuram Rajan today said, India is fairly safe against such volatility.
"We are fairly safe against global volatility provided we continue maintain the good policies. We are not vulnerable to the kind of difficulties we have experienced in 2013 and previously", said Rajan at 27th Mahatab Memorial Lecture here.
"In our defence against the global uncertainty, good policy is the first line of defence. If we have good policy, people will come to India no matter what happens in the world", said the head of the Central bank.
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"Despite two consecutive years of drought and volatile global economy, growing at the rate of 7.5 per cent show that we have attended a level of macro stability, which needs to be preserved', the RBI governor said.
"We, as Central Bank, have resisted to open up the regulations for short term foreign investment and issue of sovereign bonds in foreign currencies despite demands from the investors. Typically we are attempting to reduce the volatility in the exchange rate", Rajan said.
India currently has reserves of $360 billion dollars which was around $250 billion two years ago. This also serves as a fourth line of defence, he added.
He said, with the demand in the developed markets continuing to be subdued, emerging market like us should rely more on domestic market to sell the products and propel growth.
"Absolutely, we have to make in India. If the globe is not perceptive to our product, we have to sell it in India. We need to grow with macro stability. We need to ensure that we grow in a way that is sustainable", he observed.
Welcoming the fiscal consolidation programme, Rajan said, "we need to stay on to that and keep the inflation under control".
Stressing on the need to clean up banks that will let the banks to lend for the growth, he said, it will create the macroeconomic stabilization. "If we do all these, it will also create the policy framework so that outsiders will be willing to lend to India even at this uncertain time of global scenario".
Rajan called for continuation of the reform process like the enactment of bankruptcy code , the Aadhaar Bill, the expansion of crop insurance in the budget, land titling being taken up in Rajasthan. He hoped that GST will come in time.
Reforms will also help in attracting the international as well as domestic investors and make India a better place to stay, Rajan pointed out.
He rued that sustained intervention in the fixation of exchange rate and depreciation of the currency are against the rules of the game and it is not approved by International Monetary Fund (IMF).
