Will Rajan get second term

AV Rajwade analyses Rajan’s record in BS.

  1. Arrested the slide of INR which was in free fall in Aug 13.
  2. CPI being the inflation anchor for RBI to target. Since WPI is 0 to negative for some while, where as CPI is moderate around 5%. HE complains that has WPI being the anchor, there would have been more room for rate cut. He also questions the efficacy of interest rate to inflation( basically challenging ” IS the most important lever CB have, any good?).
  3. Is single anchor approach effective. Employment should also be concern for RBI. I think this is where I would seriously disagree with author. Government should also be shouldering some weight. RBI mandate is inflation( now codified by law) and market stabilization. Both have been done excellently. As far as increase in NPA is concerned, it is more of namesake. He only made sure the criterion is adhered strictly, and we don,t live in a fools paradise.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s