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.



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