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HindustanTimes Sat,23 Aug 2014

No differences with BJP, says RBI governor Rajan

Yashwant Raj, Hindustan Times  Washington, April 11, 2014
First Published: 02:17 IST(11/4/2014) | Last Updated: 02:19 IST(11/4/2014)

RBI governor Raghuram Rajan on Thursday dismissed reports of differences between him and the BJP, which, could form the next government according to polls.

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They were "all press-invented differences, and (they) should be seen as such — speculation, rather than any real differences," Rajan said to a question at a DC think tank event.

The governor is here for the annual spring meetings of the World Bank Group and the International Monetary Fund. And was keynote speaker at the event.

BJP treasurer Piyush Goyal criticized Rajan recently over a series of interest rate hikes he has initiated to curb inflation. "Governor Rajan is only aggravating the problems and making them worse by increasing interest rates," he said.

Subramanian Swamy, another BJP leader, was clearer: "We can make it worthwhile for him to leave."

They don’t agree with the governor’s hawkish stand on inflation. The party wants interest rates to remain low in order to boost investments and, thus, create new jobs, which will be a priority for the new government.

Governor Rajan has raised the repo rate three times.

The governor defended his policies, saying "there is a greater appreciation of our monetary framework now since we elaborated on it."

But, he said, it was work in progress.

Though there is a "greater sense of comfort on fiscal consolidation — we do have to go further," he said, adding, "we have to look at the quality of fiscal consolidation."

He did a small victory lap, though.

"The single biggest factor in the stabilization of the external market was the current account deficit that has come down significantly — from north of 5% to a rate of 1%," he said, adding, it may go down to zero in the last quarter or near-abouts." It may settle at 2.5% in the long term.

"There were a number changes that were made to make that happen," he added.


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