In the present set up of RBI without any independent authority to
have its way, Dr Raghuram Rajan cannot do much. As long as RBI has to
dance to the tunes of the Government which has only political agenda to
gain popularity and votes ignoring good economics and sustainability of
welfare measures at the cost of financial security of the economy
nothing can be expected of from Dr Rajan. The Government has to shed all
its subsidies except perhaps retaining the fuel subsidy as it has
inflationary impact when oil and gas prices are completely left to
market forces, to bring strength to the economy. Profligacy on
Government spending on unproductive areas needs to be completely eliminated /
banned.Taxation policies need a total overhaul and those who can afford
to pay need to be taxed more than squeezing those who find it hard to
make both ends meet.It requires guts on the part of the Government. RBI
cannot do anything in the matter. It can perhaps advise bankers to pay
less by way of interest on the deposits of bigwigs who earns lakhs and
crores through dividends and other means.
(This comment appeared in Business Standard in response to an article challenges before the Governor)
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