Prime Minister Manmohan Singh on Saturday reassured investors that there would be no going back on the globalisation of the Indian economy and that there was no chance of a 1991-like rerun in balance of payments crisis, which had forced India to pledge its gold reserves abroad to raise foreign exchange.
“Then, the country only had foreign exchange reserves for 15 days of imports.... now we have reserves for seven months. So there is no comparison,” he said shortly after releasing the fourth volume of the book, ‘RBI History-Looking Back and Looking Ahead’, at his residence in New Delhi.
Singh also hinted at the possibility of the Reserve Bank of India (RBI) reviewing its monetary stance, which has, while focusing on curbing inflation and stablising the rupee, had an adverse impact on growth. Clouds darken over economy as Re hits new low
“I think Raghuram Rajan (governor-designate, RBI) will evolve a policy with the help of professional persons for a national consensus if we have to carry on with implementing social and economic changes in a complex economy,” he said. Rajan will take over as RBI governor on September 5, a day after incumbent D Subbarao’s term ends.
Finance minister P Chidambaram had said in Rajya Sabha on August 14: “The (RBI’s) mandate of price stability must be seen as part of a larger mandate and the larger mandate is growth and employment.”
It has been widely speculated that the government is unhappy with Subbarao’s hawkish stance on inflation and the falling value of the rupee (which has depreciated 15% against the dollar this year). This stance has kept the cost of funds high and has been blamed for contributing substantially to the economic slowdown.
The Prime Minister admitted that import of gold was a big problem and blamed it for the high current account deficit.