According to Rajan, government-imposed credit targets are often achieved by abandoning appropriate due diligence, creating the environment for future NPAs.
The outgoing Deputy Governor warned that public sector borrowing is close to the levels seen during the ‘taper tantrum’
Former RBI Governor Raghuram Rajan has flagged key issues that the new government needs to tackle immediately
These include reining in fiscal deficit at both the Centre and state level and focussing on distressed sectors like agriculture, power and banking
Both the government and RBI would do well to contemplate how external finance should be managed.
Rajan said the open liberal democratic market system that brought the world enormous prosperity in the six decades or so after the second World War is now under attack.
Raghuram Rajan's new book, The Third Pillar, talks about why the economic system looks broken and how to fix it.
Rajan also the scheme is a doable and "well worth" to think about provided we make it more than just a handout.
"The question is, how far have we come on that (minimum government and maximum governance)? I think we continue to rely too much on the bureaucracy to do many things," the academic said at the city launch of his new book 'The Third Pillar' here this evening.
Referring to the issue of farm distress, he said loan waivers cover only those farmers who have taken loans from the formal system.
Addressing a meeting of his party workers here, Gandhi said Prime Minister Narendra Modi promised to transfer Rs 15 lakh to every bank account.
'The politician can talk about here and now and can say 'there's no inflation, why are you raising rates, you're killing the recovery, why don't you instead cut rates?',' said Rajan.
Rajan said he believes that capitalism is breaking down because it is not providing equal opportunities.
Rajan will be presented the award at a function here on March 12 on the occasion of 106th birth anniversary of late Yashwantrao Chavan, who was the first chief minister of Maharashtra, a release issued here said.
In his latest book 'The Third Pillar', Rajan argues that an imbalance of power between communities, governments and markets is the source of today’s problems. Below is an excerpt.
Rajan said that the only solution is a fundamental change.
Congress President Rahul Gandhi says his party would roll out guaranteed minimum income for the poor if it comes back to power. Such promises, in the absence of details, can be dangerous.
The study stressed that RBI is not over-capitalised and it needs to raise its capital ratio.
Addressing a session on Strategic Outlook for South Asia, Rajan said Indian economy would continue to grow while growth rate is slowing down in China.
Speaking here at a session on strategic outlook for South Asia during the World Economic Forum (WEF) annual meeting 2019, the Chicago University professor said India shares with its neighbours a variety of strengths and challenges.
Rajan said the current process of giving dividends to the government is very arbitrary in nature.
Congress will use this report as ammunition to attack PM Modi and his employment generation claims.
The current RBI-government relationship was the result of a broad intellectual consensus that was based on evidence in the Indian context and defied easy ideological classification
Farm loans, which have been announced since 2014, are a major factor responsible for fiscal stress in certain states.
Asked if the transfer of excess reserve by the RBI to the government could lead to downgrade of the rating, Rajan said: "It could...it depends on how much. It may not be an issue now...may be an issue at some point of time. That's one concern".