Friday, September 6, 2013

Limitations for the New RBI Governor


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.

Dr.T.V.Gopalakrishnan 

(This comment appeared in Business Standard in response to an article challenges before the Governor)

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