Asserting the independence of the central bank, Reserve Bank of India governor Raghuram Rajan, on Friday, said that it is he who chalks out the monetary policy and the government has little role in it.
“I determine the monetary policy… I say what it is... the government can fire me, but the government doesn’t set the monetary policy. So, in that sense, am I independent.” Rajan was speaking at St. Gallen Symposium in Switzerland.
Replying to question during the programme, that was broadcast on Bloomberg TV, the governor said, “I am happy to talk to the government...I am happy to listen to the government but ultimately the interest rate that is set, is set by me.”
Rajan, however, said that the RBI works in association with the finance ministry and is in regular touch with it. He added that he has regular conversations with the finance minister.
“We control the monetary policy… In India, what happens is when we want to do something big, we go and tell the government this is what we want to do and the government is usually supportive...We talk to each other,” explained Rajan.
The governor also said that India would soon manage to achieve 7-8% growth rate with right policies. “Once inflation is brought down to a manageable level it would be possible for the central bank to address and deal with other problems and look at growth,” said Rajan.
India’s economic growth rate was 4.9% in 2013-14, marginally higher from the 4.5% in 2012-13. In the current fiscal the country’s growth rate is expected to be around 5.5%.