I have no differences with BJP leadership: Rajan
Reserve Bank of India (RBI) governor Raghuram Rajan brushed aside reports that he has differences with the leaders of Bharatiya Janata Party (BJP), widely expected to form the next government.
Rajan said that it were “all press-invented differences... I think it should be seen as speculation rather than any actual differences,” Rajan said to a question at a think tank event.
The governor is in Washington t o attend t he annual spring meetings of the World Bank Group and the International Monetary Fund. Rajan was a keynote speaker at the event. Rajan’s comment comes amid the backdrop of certain BJP leaders questioning his policies to deal with the current economic woes. BJP treasurer Piyush Goyal criticised Rajan recently over a series of interest rate hikes he has initiated to curb inflation. “Governor Rajan is only aggravating the problems and making them worse by increasing interest rates,” he said.
Expressing similar opinion, Subramanian Swami, another BJP leader, said: “We can make it worthwhile for him (Raghuram Rajan) to leave.”
BJP leaders seems to disagree with the governor’s stand on inflation. The party wants interest rates to remain low in order to boost investments and, thus, create new jobs, which will be a priority for the new government.
Rajan has raised the repo rate (the rate at which Reserve Bank of India lends funds to commercial banks) three times.
The governor has defended his policies, saying: “There is a greater appreciation of our monetary framework now since we elaborated on it,” adding that the work is in progress.
Though there is a “greater sense of comfort on fiscal consolidation — we do have to go further,” he said, questioning the quality of the fiscal consolidation.
He did a small victory lap, though. “The single biggest factor in the stabilisation of the external market was the current account deficit (CAD) that has come down significantly — from north of 5% to a rate of 1%,” he said. It may go down to zero in the last quarter or near-abouts, he said. “It may settle at 2.5% in the long term.”
Rajan was appointed RBI governor in September 2013 by Congress-led UPA, which is expected to perform poorly in the ongoing general election.