Reference to Panama Papers
“I do believe that we should allow our enterprises to find their way ... create the kind of infrastructure structure, the business environment which will allow them to go where they decide to go,” Rajan said.
“My sense is that we have almost everything for the leap in production, whether it is manufacturing or services, we can take the step forward … we also have to get ideas from everywhere, and our young generation is in that mode, it is willing to take the best of the world along with it.”
Rajan, who has stubbornly focussed on bringing down inflation and prodding a sometimes reluctant government to commit to set right its finances, is now acknowledging that the economy is on the right path after years of soaring fiscal and current account deficits. His comments come on the back of an interest rate cut this week and more than a month after the government stuck to its fiscal deficit road map in the Budget and announced a big step-up in infrastructure spending.
Rajan was reluctant to cut interest rates in the early part of his tenure and constantly emphasised the need for the government to control expenditure and stick to its fiscal deficit road map.
This put him at odds with not just the previous United Progressive Alliance government but also with the Narendra Modi-led National Democratic Alliance, which came to power promising jobs and increased investment. Rajan was also highly critical of the so-called trade-off between growth and inflation, and insisted on keeping the focus on bringing down sky-high prices.
He has been consistently cautious about India’s economic prospects and recovery, only saying that parts of the economy appear to be recovering and that we are some distance away from rapid growth.
“For the first time we are close to power sufficiency. I know the commentary on the fact that some demand is not being expressed. But we are close (to sufficiency) and given that we are using only 60-65% of the available capacity there is room for power production,” Rajan said.
He expressed concern about the questions being raised on wealth created by private individuals in the light of the ‘Panama Papers’ revelations. “Increasingly, this talk about whether entrepreneurial wealth is illegitimate, whether selfmade people should have what they have and whether that is something that’s fair game,” Rajan opined.
“I think this is dangerous. And the fact that there are occasions when people are found to be hiding their wealth as in the Panama allegations, essentially contributes to this process of de-legitimisation.” The Panama Papers reveal details over 500 Indians with links to offshore firms.