Rajan: Economy prepared for any eventuality now vs 6 months ago - Free Press Journal

NEW DELHI : Reserve Bank of India Governor Raghuram Rajan said the country is better prepared for "any eventuality" in the economy now than it was six months ago. He was responding to a query on how prepared India was in case the US Federal Reserve makes a steeper-than-expected tapering of its asset purchase programme.

"We are better prepared. I would never say fully prepared for any eventuality. We always have to be vigilant. We are better prepared now certainly than we were six months ago," Rajan told reporters after meeting the Financial Stability and Development Council chaired by Finance Minister P. Chidambaram.

"A lot has been done to make the economy more robust," he added. The Indian rupee took a heavy beating and fell 6.77% against the dollar between June and August, after the Federal Reserve first made pubic its decision to begin the reversal of the quantitative easing.

In a move to roll back some stimulus measures, the Fed, on Jan 29, announced trimming of mortgage-backed securities and longer-term treasury security purchases to $65 bln per month from $75 bln earlier. However, the rupee remained stable after the announcement.

The RBI governor said the financial stability council discussed a broad set of issues facing the economy and decided to "move forward" on some of them.

"As and when precise decisions are determined, we will obviously announce them," Rajan said, not elaborating on any specific issue.

On Janet Yellen taking over as the new chair of the US Fed, Rajan said, "Janet Yellen is a very experienced central banker who has spent a lot of time at the Fed. I have full faith that she will do what is appropriate and that she will be a reliable central banker." -Cogencis