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Fear Of Economic Volatility Raises as RBI Governor Decides To Resign

There has been widespread speculation that Rajan quit because of what some termed as “discouraging signals” from the government.

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Image Source: Financial Express
  • India is now the world’s fastest-growing major economy
  • Raghuram Rajan helped stabilize India’s currency when the rupee was plunging and inflation was raging
  • Praising Rajan’s contribution, Finance Minister Arun Jaitley expressed confidence his successor will be a “good person”

The Indian Central Bank governor’s decision not to seek a second term in office has raised concerns the country could face a loss in investor confidence and economic volatility. The widely-respected economist, Raghuram Rajan, is credited with making an important contribution to India’s economic turnaround after a choppy phase.In a signal of uncertainty looming ahead of his departure in September, the rupee fell to a one-month low Monday.

Rajan’s departure: not a big surprise

Rajan’s weekend announcement to quit came after weeks of speculation on whether the government will renew his tenure as head of the Reserve Bank of India (RBI). In a letter to his staff, Rajan said he had been open to staying on to see through the reforms he had begun, but that “on due reflection and after consultation with the government,” he was returning to his “ultimate home in the realm of ideas.”

Widely feted as one of the world’s best Central Bank governors, the former International Monetary Bank economist helped stabilize India’s currency when the rupee was plunging and inflation was raging. As growth momentum returned, the country regained credibility among international investors, who had turned their back on emerging economies.

India’s economy is soaring

While countries like Brazil and Russia continue to face hard times, India is now the world’s fastest-growing major economy.

Finance Minister Arun Jaitley sought to calm investors Monday telling a television network “the country’s economy is driven by strong fundamental factors.” Praising Rajan’s contribution, he expressed confidence his successor will be a “good person.”

Finance Minister Arun Jaitley speaks to RBI Governor Raghuram Rajan during a convocation ceremony for students at a university in Mumbai on January 9, 2015 Image Source: NDTV Profit

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Symbol of stability

The head of emerging market economics at JP Morgan, Jahangir Aziz, stressed that Rajan was a symbol of stability for many investors. “They have invested on the fact that India has managed to put together a reasonably strong story of macro-economic stability. Many of them associate that in part to the Reserve Bank of India, Raghuram Rajan.”

Aziz said investors will watch to see whom the government appoints as Rajan’s successor and would like to see continuity in policies. “The need of the hour is to calm down market nerves,” he says.

There has been widespread speculation that Rajan quit because of what some termed as “discouraging signals” from the government.

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There was criticism of Rajan

Rajan was not without his critics, who said his refusal to slash interest rates, and a clean-up of bad loans he was pushing at state-owned banks, were choking private investment. The most vocal attack came from a member of the ruling Bharatiya Janata Party, Subramaniam Swamy, who raised eyebrows with his comment that Rajan was “mentally not fully Indian” and complained that he had not acted to ease the heavy debt burden of many Indian companies.

Although India’s economy is growing at over 7 percent and has overtaken China as the world’s fastest growing economy, Rajan has repeatedly cautioned that India’s economic recovery still rests on fragile foundations.

Economist Rajiv Kumar at New Delhi’s Center for Policy Research said fears about the impact of Rajan’s exit could be overblown and pointed out that stock markets did not tank Monday as many had feared. “It’s institutions that matter, and the RBI has known to be a very competent institution with huge inherent strengths,” says Kumar.

Meanwhile, the government ushered in more economic reforms Monday, announcing sweeping changes to rules on foreign direct investment by opening up its defense and civil aviation sectors to complete outside ownership, and loosening some restrictions on the pharmaceutical and retail sectors.(Source :VOA)

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UP Govt Sets Record of Testing 4.85 Crore People for Covid

Over 1 lakh medical teams have been involved in the process of screening by UP government

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Uttar Pradesh government sets record of testing 4.85 crore persons for covid -19. Pixabay

The Yogi Adityanath government in Uttar Pradesh has created a record of sorts by ensuring medical screening of 4.85 crore persons in the state for COVID-19 as per Latest news on coronavirus disease (COVID-19).

‘Our medical teams have reached out to 4.85 crore people in more than 78 lakh households for medical testing for corona. Over one lakh medical teams are actively involved in screening people,” said an official spokesman.

The spokesman said that ASHA (Accredited Social Health Activist) workers have also been included in the medical teams.

‘Nigrani’ Samitis have been set up at village levels to keep an eye on the corona suspects and monitor those in quarantine centres. The Samitis keep the concerned officials informed of the developments at the village level and help in medical screening.

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“Our medical teams have reached out to 4.85 crore people in more than 78 lakh households for medical testing for corona.”, said an official spokesman of Yogi government. Wikimedia Commons

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The Chief Minister, while addressing the meeting of Team 11 on Wednesday, said that over one lakh beds were available in COVID hospitals in level one, two and three in the state. Of these 2,000 beds are fitted with ventilators.

The medical screening of migrant workers was continuing in all the quarantine centres and all workers who were returning home, were being provided ration kits. (IANS)

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Odisha Govt to Hold Rath Yatra Without Devotees this Year

Rath Yatra is said to be held in the absence of devotees this year

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Rath Yatra devotees
Odisha government has ensured non-arrival of devotees to Puri. Wikimedia Commons

The annual Rath Yatra of Odisha government and his siblings could be performed provided the Odisha government ensured non-arrival of devotees to Puri, said Puri Gajapati Dibya Singha Deb, here on Saturday.

The Ratha Yatra could be organised with minimum servitors and without devotees if the Odisha government granted permission for the 9-day sojourn of deities, said the Puri Gajapati after a meeting of Shree Jagannath Temple Managing Committee during the day.

As part of Rath Yatra and Bahuda Yatra, three chariots would be pulled on the Badadanda (grand road) in presence of servitors, officials and policemen. Snana Yatra, scheduled on June 5, could be performed inside temple premises, he said.

The Ratha Yatra
The Ratha Yatra could be organised with minimum servitors and without devotees. Wikiimedia Commons

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He said the temple would remain closed till Niladribije in view of Covid-19 pandemic.

The Information and Public Relations Department will make arrangements for live telecast of Snana Yatra and Rath Yatra rituals. “I request devotees to stay safe at home and watch the telecast on television,” the Puri Gajapati said. (IANS)

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Canada Faces Sharpest Downturn in GDP Since 2009

Canadian economy sees worst quarterly performance since 2009

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Canada witnesses worst quarterly performance since 2009 due to the COVID-19 outbreak. Pixabay

Canada’s national statistical agency said that the country’s economy saw the worst quarterly performance since 2009 due to the COVID-19 pandemic.

Statistics Canada said on Friday that it came as the GDP suffered a big drop in March as restrictions against the spread of COVID-19 began rolling out during the month, reports Xinhua news agency.

The downturn in GDP, the sharpest since the first quarter of 2009, reflects measures rolled out in March to contain the COVID-19 pandemic, such as closures of school and non-essential businesses, border shutdowns and travel restrictions, as well as events earlier in the quarter, mainly the Ontario teachers’ strike and rail blockades in February.

The country’s GDP fell 7.2 per cent in March from February, the most severe month-on-month fall, while annualized growth for the first quarter decreased by 8.2 per cent, the largest since the depths of the Great Recession.

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The country’s GDP fell 7.2 per cent in March from February, the most severe month-on-month fall. Pixabay

Household spending was reduced by 2.3 per cent in the first quarter of 2020, the steepest quarterly drop ever recorded.

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Spending reductions were influenced by substantial job losses, income uncertainty and limited opportunities to spend because of the mandatory closure of non-essential retail stores, restaurants and services, and restrictions on travel and tourism activities.

Real GDP plummeted by a record 11 per cent in April from March as most sections of the economy were shut down to fight the COVID-19 outbreak.

The March and April falls are likely to be the largest consecutive monthly declines on record, said the country’s statistics agency. (IANS)