In an exclusive interview to Shekhar Gupta, Reserve Bank of India Governor Raghuram Rajan speaks about Indian economy, banking sector as well as global economy in the wake of the current turmoil in the financial markets. Here are the highlights of what Dr Rajan said on the sidelines of the World Economic Forum meet in Davos. (Watch Video)
-Market situation very volatile -Today markets are slowly recovering -Central banks pumped up market prices -Markets unaware of true level fundamentals -Volatility to continue till markets stabilise
-Markets don't know what the right levels are -China slowdown, a cause of worry -Emerging markets like Brazil in deep recession -Need to induce confidence in the economy -My wife calls me Cassy, short for Cassandra -I am not a doom and gloom guy -I like to see the upside of things -India is in the process of recovery -Limits of certain policies are worrying -Central bankers need to self-examine -Need environment for sustainable investment -Lower interest rates is always not the solution -We have laws which favour the people who can work the courts on loan defaults -Have made some laws stringent on loan defaulters. Government's bankruptcy code will make a big difference -If you owe a lot of money and still celebrate birthday bashes, it gives a wrong message to the people -If you are in trouble cut down your expenses, show to the people that you are doing something -RBI aims to put banks on tracks, not shut them -Entrepreneurship needs to be celebrated -Entrepreneurs in India must be encouraged -Start-up India is a great programme -Established firms must do their duty -Risk-free rate will reduce as inflation reduces -Central banks must allow things to normalise -India not in the business of depreciating the rupee -We feel the pinch when euro depreciates -Need a more predictable economic scenario -Exchange rates are not the way forward -Rupee in real effective terms is flat. Rupee should not be too strong or too weak -We are in the process of cleaning up banks. Banks have a lot of flexibility on dealing with bad debts -Banks, RBI and government working closely on bad debt issue -This gives up a chance to deal with it -Government ready to help with more capital for banks -Hike in excise duty on oil a sensible step -There is pain in some pockets of the industry. Overall, profitability is reasonable -Competition between states to attract investment a good development -There is a big need for investment in agriculture -Crop insurance can be a game changer -Hope that the current reform steps taken will bring in sustainable growth for a long period of time
