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Chidambaram criticizes government, claims economy stuck in groove

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New Delhi: The Indian economy is stuck in a groove and the growth of the Gross Domestic Product in 2015-16 is not likely to be higher than 7.3 percent, former finance minister P. Chidambaram said on Friday.

There was acute distress in rural India since promised jobs were not created and people were not impressed by Modi’s numerous visits to foreign countries, he said at a press conference here.

The Congress leader said the BJP-led government had confidently predicted the growth of Indian economy at 8.1 to 8.5 per cent in 2015-16 at the beginning of 2015 and that many of its promises, including on more jobs, were premised on a high growth of GDP.

“I am afraid none of the promises has materialized. For the whole of 2015-16, GDP growth is not likely to be higher than 7 to 7.3 percent, which means it will be the same as – or lower than – in 2014-15. The economy is stuck in a groove,” Chidambaram said.

He said the mid-year economic analysis has pointed out that private investment and exports – two of the four drivers of demand – were languishing.

“The Indian economy is like a car running on two wheels. Corporate balance sheets are stressed, net sales have fallen by 5.3 percent, and profit after tax is flat. Non-food credit growth at 8.3 percent is the slowest in 20 years. The growth of credit to industry is 4.6 percent while credit to medium enterprises has actually shrunk by 9.1 percent,” the Congress leader said.

The former minister said exports have recorded decline for 12 successive months compared with the previous year. “This is unprecedented,” he said.

He said the government did not seem confident of meeting the fiscal deficit target of 3.9 per cent and cautioned it against deviating from the path of fiscal consolidation in 2016-17.

“Crop insurance is unavailable to most farmers. Banks are reluctant to give loans against jewelry. Education loans have practically stopped,” he said.

The Congress leader accused the government of failing to check price rise and alleged growing intolerance, saying these had led to “much grief and fear among the people”.

The former minister said the 26th quarterly employment survey showed that job creation in manufacturing and export-oriented sectors fell by 43,000 whereas these sectors added 182,000 jobs in the same period in 2014.

“There is no evidence that the promised jobs are being created,” the former finance minister said.

Chidambaram referred to the low prices of international crude oil and said there was no international pressure on the government.

“I am not yet prepared to say that there has been fiscal mismanagement, but there are pointers to serious mistakes in fiscal management.”

Chidambaram accused the Narandra Modi government of not engaging the opposition on any important issue and said people were wondering if the central government had a clear and consistent policy on Pakistan.

He also rejected the charge of “obstructionism” made against the Congress by Prime Minister Narendra Modi on Thursday.

Chidambaram said the Congress opposition to the government’s alleged wrong policies or poorly-drafted laws or acts of misconduct or misuse of government agencies cannot be termed as obstructionism.

The Congress leader said that the overbearing attitude of the government was mainly responsible for the frequent disruptions in parliament and the absence of cooperation outside parliament.

He said the Congress had cooperated with the government in passing 67 and 45 bills in the Lok Sabha and the Rajya Sabha respectively during the last 19 months.

Referring to Nepal, he said India seemed to have lost the goodwill of the people as well as the government of Nepal as also Madhesi parties.

“Rhetoric, U-turns, and impulsive steps do not make for a coherent foreign policy,” he remarked.

Referring to Modi’s visits abroad, the Congress leader said: “When anything is overdone, there are not only diminishing returns, but it also invites ridicule, as you will find from a cursory survey of the social media.” (IANS)

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Raghuram Rajan: The Man Who Revolutionized The Indian Banking System

During his academic days, he won the Director's Gold Medal in IIT Delhi and was a Gold medalist at IIM Ahmedabad.

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Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh. Wikimedia Commons
Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh. Wikimedia Commons
  • On September 5, 2013, Rajan took charge of Governor of India’s central banking institution
  • Raghuram Rajan graduated in electrical engineering from IIT Delhi
  • Under Raghuram Rajan, the RBI licensed two universal banks and approved eleven payments banks

Raghuram Rajan is one of the technically financial people to grace the Indian economy and banking sector. He came at the time when the Indian economy was in the worst crisis ever faced in last decades. Through his meticulous planning, he banked on reforming and stabilizing the financial situation in the nation. On September 5, 2013, Rajan took charge of Governor of India’s central banking institution, succeeding Duvvuri Subbarao.

Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh in a Tamil family. His father was a senior officer in the Intelligence Bureau department. He is married to Radhika, a classmate from IIM and has two children.

Also Read: Was ‘The First Women President Of India’ A Well Deserved One?

Raghuram Rajan graduated in electrical engineering from IIT Delhi and then he joined Tata Administrative Services as a management trainee. However, he soon left this to pursue a doctoral program in management at the MIT Sloan School of Management. After that, he acquired a Post Graduate Diploma in Business Administration from IIM, Ahmedabad in 1987 and later Raghuram Rajan did his PhD from the Massachusetts Institute of Technology.

Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015.  Wikimedia Commons
Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015. Wikimedia Commons

During his academic days, he won the Director’s Gold Medal in IIT Delhi and was a Gold medalist at IIM Ahmedabad. Even after being so bright, he admitted of having poor command over the Hindi language.

Take a look at some of the aspects related to the life of one of the genius economist of India: 

  1. After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Before that, the rupee had weakened sharply against the dollar, hitting almost Rs 69 to a single dollar.
  2. To bring down the inflation, the RBI under Rajan adopted the Consumer Price Index (CPI) despite the Central Government’s disapproval. Consequently, the CPI dropped from 9.52 percent in August 2013 to 5.24percent in April 2016, accompanied by the required drop in global commodity prices.
  3. Under Raghuram Rajan, the RBI licensed two universal banks and approved eleven payments banks. It was done to extend the country’s banking services to the two-thirds of the population, who were until then still deprived of basic banking facilities.
  4. Raghuram Rajan has the privilege to be appointed as the youngest-ever Economic Counselor and Director of Research (chief economist) at the International Monetary Fund (IMF) from October 2003 to December 2006.
  5. During his stay at IIT Delhi, Raghuram Rajan was the head of the student’s council.
  6. Raghuram Rajan was ranked by his fellow mates as the economist with ‘the most important ideas for a post-crisis world’ in a 2011 poll in The Economist.
  7. Raghuram Rajan has the distinction of being featured on Foreign Policy magazine’s Top 100 Global Thinkers list in 2010 and 2012.
  8. Raghuram Rajan has also served as a professor in the University of Chicago’s Booth School of Business in the economics faculty. Before leaving the position due to public service commitments, he was awarded the accolade in 2007 which he held till 2013.
  9. Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015. The bank was established as an international company by shares of the central banks of different countries. The bank provides banking facilities to the central bank and is also regarded as the key bank of the central banks.
  10. Raghuram Rajan authored a very popular book, ‘Fault Lines: How Hidden Fractures Still Threaten the World Economy,’ was awarded the Best Business Book of the Year in 2010 by Financial Times-Goldman Sachs. This book argued that serious flaws in the economy are to blame for the current economic crisis.

    After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Wikimedia Commons
    After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Wikimedia Commons
  11. Raghuram Rajan was awarded the inaugural Fischer Black Prize by the American Finance Association in January 2003. The award is given to the financial economist under the age of 40 who has made the significant contribution to the sector and is given in every two years.
  12. In 2005, Raghuram Rajan presented a theory outlining the looming financial dangers and risks associated with the current system and he got a very negative response for it. But when an actual global economic crisis occurred in 2008, his analytical skills came true.
  13. During Raghuram Rajan’s term as the RBI(Reserve Bank of India) governor, the RBI sold the longest ever government bonds with a 40-year maturity.
  14. In September 2003, Raghuram Rajan became the youngest ever to be appointed as the Economic Counselor and Director of Research (Chief Economist) of the International Monetary Fund.
  15. Raghuram Rajan has served at the University of Chicago’s Booth School of Business as the Eric J. Gleacher Distinguished Service Professor.