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Raghuram Govind Rajan who took over as the 23rd Governor of the Reserve Bank today said, " India is a strong economy with great future."
New RBI Governor Raghuram Rajan today came out with a slew of measures, including more trade settlement in rupees to rescue the battered financial markets and hinted at a shift in focus from inflation control, doggedly pursued by his predecessor, to boosting growth.
Shortly after he took over as the 23rd Governor of the central bank, Rajan, 50, addressed the media with a prepared statement in which he laid out a detailed road map for his innings in the short term, which he called a "big initial package."
He also rescheduled by a few days the date for his much- anticipated first monetary policy statement to September 20. The new Governor set up a number of committees for revising and strengthening monetary policy framework, financial stability, financial inclusion, NPAs and an outside panel of experts headed by former Governor Bimal Jalan to screen applications for new bank licenses.
Rajan said the new bank licences will be issued around January next year. Apparently reflecting a shift in the approach from his predecessor D Subbarao, who had serious differences with the government of late, Rajan said the primary role of the bank is monetary stability to sustain confidence in the value of the rupee. "Ultimately, this means low and stable expectations of inflation, whether that inflation stems from domestic sources or from changes in the value of the currency, from supply constraints or demand pressures."...but we have two other important mandates; inclusive growth and development, as well as financial stability," he said.
Asked about Subbarao's focus on targeting inflation, Rajan said he would reserve his comments till September 20.
Rajan said the bunch of reforms has been unveiled today to enhance growth. "I think there are so many low-hanging fruits in the economy that if we only pluck them we can accelerate growth substantially."
The measures disclosed to support the rupee include liberalisation of the financial market by enhancing the limits for exporters to re-book cancelled forward exchange contracts and opening a special concessional window for swapping foreign currency non-resident (FCNR) deposits and dollar funds. "My sense is that we certainly don't need false optimism. But I think there is good reason to believe that in the medium run, the future of the country is strong," he said.
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