 On Growth v/s inflation "What I would like to see is that we achieve the RBI target of trying to bring WPI inflation below 5%. But the pace at which that is done is to some extent going to be calibrated to economic conditions. We want to fight against inflation, but it is not a take-no-prisoners stance" "We have to look at what we believe inflation to be in the longer horizon... six to twelve months ahead. We have to look through temporary changes in inflation which will be corrected through crops coming in and so on. I do not think one particular inflation reading will affect our stance" "From a growth perspective there are other more important factors that are going to come into the economy over time including project completion, power generation, the availability of power, the kharief crop and the sentiment in rural areas will be an important factor"On interest rates "The MSF cut we have done today affects a significant quantum of funds that are borrowed from markets and the 75 basis points there is a significant reduction in cost of funding. Set against that the 25 basis point increase in the repo rate is marginal. We have actually lowered the net cost of borrowing. On capping overseas investments It was a precautionary measure to prevent huge outflows. The movement you say capital controls you are putting us into a trap that a number of analysts are putting us int o. We liberalised when we had money pouring in as we did not want to create problems here. We contracted when there was money pouring out. The next time money starts pouring in we will be happy to liberalise again. On tapering We have prepared for the tapering, those measures will play out. Till yesterday, we had received $ 466 million through the FCNR(B) and $ 917 million through the swap facility to a total of nearly $ 1.4 billion. I dont think we need to contemplate a whole new set of measures now that tapering has been postponed. Let us remember that the postponement of tapering is only that, a postponement. We must use this time to create a bullet proof national balance sheet and growth agenda, which creates confidence in citizens and investors alike. On the external situ ation I think on the external front the noises on Syria are quite comforting. The worry was that if there was action on Syria it could push up the price of oil considerably even if for a temporary period it would painful for our economy. So I am glad that negotiation has taken over from threat of action. I would see the growth that is picking up in Europe in Japan as very positive. It is helping us improve our exports and helping us shrink our current account deficit at a faster pace than people thought initially. On current account deficit We can finance this year's current account deficit without a substantial drawdown from reserves. If all goes well there will be an accretion to reserves. If that accretion to reserves looks like it is overwhelming us we will take appropriate decision at that time.  via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNElTRYeygXBZjmixMJlVAPu97w1WQ&url=http://timesofindia.indiatimes.com/business/india-business/We-need-bullet-proof-balance-sheet-Raghuram-Rajan/articleshow/22830618.cms | |||
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