The thought that
Dr.Raghuram Rajan, the RBI Governor visited our campus at IIM Raipur still
gives me goose bumps. He came across not only as a man brimming with knowledge
but also as a person with humility that formed an extensive part of his demeanor.
Dr.Rajan commenced
the session with a brief on where the Indian economy stands, how the RBI had
tackled the pressing issue of CAD (Current Account Deficit) and the measures
undertaken to revive the economy. This was followed by a question answer round by the
students. It was a wonderful interaction filled with a few light moments and a
lot of knowledge sharing that ended with the departure of the RBI Governor.
The RBI Governor’s
address focused on the measures taken by the RBI to bring the Indian economy back
on the growth trajectory. The RBI is focusing on creating a fine balance
between the mounting inflation and the slowing economic growth. It has been following
a balanced approach instead of the hawkish stance followed till last year.
Although inflation remains a pressing issue, inflation can be
curbed through stringent measures. However, this is likely to have an adverse
impact on the economic growth. The RBI is aiming at achieving a slight
moderation in the inflation figures in the near term in line with the growth
targets.
Secondly, CAD was
under control and the government was even prepared if USA proceeded with the
quantitative easing process. This statement exuded confidence that the Indian
economy was out of the woods for the moment and the rupee depreciation would be
curbed in the coming future.
Thirdly, he also
emphasized that the Indian economy was facing fundamental problems such as
pending implementation of economic and tax reforms, creaking infrastructure,
project implementation delays, procedural and clearance delays. Unless these
issues were resolved, bringing growth back on track would be difficult. He also
pointed out that when the country was tooting about the “India Shining Story”,
it still faced these underlying difficulties. A slowdown has
brought these fundamental problems to the forefront.
The pitfall is that
these fundamental issues have led investors and banks to rethink their project
investments across India. The delays have not only created a bottleneck for the
original investors but also for the banks that have their loan and investment
amounts blocked in existing projects. This situation is causing an asset
liability mismatch for banks and also leading to rising NPAs. This is an area
of concern and requires to be addressed.
The government in
coalition with the RBI, plans to undertake small
steps to resolve these fundamental issues that are detrimental to the Indian
economic growth. The resolution of these issues is expected to boost investor
confidence and mobilise funds in the Indian economy.
Lastly, the RBI
governor addressed the queries that the students had about inflation, food
security bill and the like. It was a memorable and an enriching experience that
involved knowledge sharing between the Governor and the students.
