Taking his critics head-on, RBI Governor Raghuram Rajan has challenged them to show how inflation is “very low” before accusing him of “being behind the curve” in his focus on containing price rise than on growth and debunked such criticism as mere ‘dialogues’.
Rajan, who has often been seen as being critical of the government and its policies, also said there is “lot of frustration” about the pace of economic recovery, but attributed it to the two successive droughts, weak global economy and external shocks like Brexit.
Given these constraints, performance of Indian economy has been “quite creditable” and prospects of good monsoon as well as structural reforms and macroeconomic stability will accelerate the growth going forward, he added.
On GDP growth figures, the outgoing Governor said he has refrained from “thumping on the table” to put a number on GDP growth, adding people sometimes get “overly fixated with a particular growth number”, though figures like 7.6 per cent and 8 per cent are within the same range.
Speaking to a select group of journalists here on a wide range of issues, Rajan said regarding financial inclusion, it is not possible to have bank branches in every village because that would be too expensive, but RBI is exploring other options like mobile branches and mini or micro branches.
Rajan, who has been pilloried by his critics for keeping interest rates high and has also been accused of stifling growth, cited consumer price index (CPI)-based inflation surging for the fourth straight month in June to 5.77 per cent to defend his record.
“This discussion (on being behind the curve) keeps going on without any economic basis. You saw the CPI numbers just last week — 5.8 per cent is the CPI inflation, our policy rate is 6.5 per cent,” he said.
Asserting that he does not “really pay attention to this kind of dialogues”, Rajan said those calling him behind the curve should explain how inflation is very low to warrant lower interest rates.
One of the biggest criticisms of Rajan’s monetary policy has been by BJP MP Subramanian Swamy, who accused him of being “mentally not fully Indian” and had sought his dismissal.
Amid unrelenting personal attacks, Rajan last month announced that he would step down at the end of his three-year tenure on September 4 and return to academia.