New Delhi: RBI governor Raghuram Rajan said that it is ‘politically difficult’ to speed up structural reforms in India.
Delivering a lecture on ‘the global economy and India’ in Bhubaneswar on Saturday night, stressed on the need for cleansing the banks and checking inflation to ensure faster growth.
Rajan also said labour market reforms can boost growth, but the process may draw opposition.
The former chief economist of IMF said new rules need to be evolved for international monetary policy and called for the emerging markets like India to “speak up and raise their voice louder” to have a say in setting the global agenda.”
The governor said India is fairly safe from volatile global economy and it has posted 7.5 per cent growth despite two droughts and weak international market.
He said, “despite two droughts and weak international market scenario, we are registering about 7.5 per cent growth because of macro level stability.”
While there is a need to ensure macro level stabilisation, the country would have to keep inflation under control and cleanse the banks, he said. “This can strengthen macro level stability,” he said.
In addition to that, maintaining reforms would attract both international and domestic investors and spur activities, Rajan said.
Describing a good policy as the first line of defence for the economy, he said in order to ensure safe borrowings, the country should try to opt for long-term borrowings instead of short-term ones.
Stating that there should be a more responsible global monetary policy that follows rules of the game, he said a number of countries are now blaming each other over adoption of aggressive policies.
All have domestic mandate as they have to worry about several things like ensuring growth and keeping inflation rate under control, he said.
(With Agency Inputs)