Dr Y V Reddy, former governor of Reserve Bank of India (RBI) feels that India remained less affected by the global meltdown due to the apex bank’s prudent monetary policy and financial sector reforms witnessed in the past few years. He said globally now RBI’s policies are better appreciated. Excerpts from the interview with Lalatendu Mishra.
How we remained less affected by the global financial crisis?
RBI and public policies give highest priority to stability. We have large number of people without social benefit so we are more careful while framing policies. Due to this our banks remained healthy unlike their western counter parts. We protected the banks for the larger benefit of our people and this has helped.
How long will the slow down continue?
There is a general appreciation that our financial sector is safe. So our recovery will be faster than others because the initial impact has been managed well.
Is the worst over for us?
We can’t say. It much depends on when the West recovers. Europe may take little more time. But India will remain a stable economy with a sound financial sector and the second most largest economy after China. India will easily achieve a growth of 7 to 8 per cent.
What are you views about the current softer interest rate regime?
Can’t comment. It is yet to be proved beneficial. It will take time to collate data and come to a conclusion.
Your critics say your higher interest regime hindered growth?
They might think that way, but many appreciated me for my policies. I was neutral at the middle and acted at the best interest of the country.