The PM on the sidelines of releasing a book on the Reserve Bank of India (RBI) history, told Indian news agency PTI that there is no question of a balance of payment crisis like in 1991 since the foreign exchange market is now linked to the market and not like back then when it was a fixed rate.
He said India now has reserves for six to seven months, as he released the volume "History of the RBI 1981-97" here, and extended a hearty welcome to Dr. Raghuram Rajan as the new RBI governor.
"In him, we have a very distinguished economist of international fame," he said.
Speaking on the History of RBI, he said: "It goes without saying that the history of the Reserve Bank is the history of the growth of our country since independence. The Reserve Bank has done the country proud - the role which it has played in shaping the monetary policy, in shaping the credit policy, and, if I remember correctly, in also influencing, particularly, the supply of credit to rural areas."
"The Reserve Bank has served our country with great distinction. But I venture to think that the best is yet to come," he said.
He said: "Dr. Subbarao has touched upon various facets of policy-making, and I dare say, Dr. Raghuram Rajan will build on the experience of his predecessors to chart out a new course of action in very difficult circumstances that our economy is facing."
"We can never be satisfied with the status quo. When I became the Governor, I had no great knowledge of what monetary policy is about, and therefore, I asked the late Prof. Chakravarty to head a committee to look at the functioning, the goals, the means and measures of monetary policy, and that report was pretty influential for a period of time. And I would venture to think that the time has come, when we should revisit some of those areas - the possibilities and limitations of monetary policy in a globalized economy, in a fiscally constrained economy - I think that is one subject.
"But macro-economic policy-making, targets and instruments, I think, is another area, where I feel fresh thinking is called for, and I sincerely hope that the Governors of the future, particularly Dr. Raghuram Rajan, will attempt to revisit some of these difficult areas.
And thank you all, at least among professional people, a degree of national consensus, which we need, if we have to carry out social and economic change in a country as large, as diverse, as complex as India is.
As I said, the Reserve Bank has served our country with great distinction. But as I ventured to think, the best is yet to come.
"With these words, I wish Dr. Subbarao the best. he has served the Reserve Bank and our country with great devotion. And I extend a hearty welcome to his successor, Dr. Raghuram Rajan. In him, we have a very distinguished economist of international fame. I sincerely hope that the Reserve Bank of India will see a more glorious period under his Governorship," the PM said.
--IBNS (Posted on 17-08-2013)