I do what I do.

AuthorArora, Nitin

I do what I do. By Raghuram G. Rajan, Harpers Collins Publishers India, 2017, pp. xvi + 325, Rs.699 Transforming a Fragile Indian Economy to Stable One: Role of Monetary Authority

The monetary authority must be independent enough in a developing economy so as the balance between growth and inflation rate can be maintained. The portfolio of the Governor of Reserve Bank of India (RBI) is therefore, a challenging one that requires an eagle's eye on various economic activities to cater to the development with justice; a primary need of Indian economy. Raghuram G. Rajan had been a Chief Economist of the International Monetary Fund (2003-2006) and had joined as 23rd Governor of the RBI on 4th September, 2013. A contestant in the race of being Nobel Laureate in the field of Economics in 2017, the star governor Dr. Raghuram G. Rajan shares his insights of functioning of I and intellectual moves taken during the critical conditions of Indian economy in his manuscript, I do what I do. At the time of his joining, India was declared a 'fragile' emerging market and international investors were losing confidence in Indian economy amidst high inflation, severe current account deficit, and in free fall of rupee. Being Governor of RBI, he believed that four messages i.e., building confidence of public, commitment of low inflation, boldness, transparency and predictability of I needed to be spread to uplift the economy out of the 'fragile' status. When rupee was severely falling, Raghuram Rajan's intelligent move made $26 billion inflow into India through three-year foreign currency non-resident (FCNR ) deposits on the condition that rupee would sap into dollars at a cheap rate to uplift confidence in Indian currency across the globe and hence rupee started appreciating. This process of making Indian currency stable made hi 'rock star' central bank governor. Since the rupee had been stabled, second mission was to disinflate the economy. During the period of his joining, India had highest consumer price index (CPI) among the large countries because of excess demand.

As stressed upon by Subbarao (2016), the succeeding governor Raghuram Rajan too highlighted that RBI's foremost objective is monetary stability along with inclusive sustainable economic growth. He believes that high interest rate to curb inflation by reducing de and is not a suitable option for Indian economy. Keeping high interest rates to bring inflation down is not an intelligent action as it can affect demand severely and hence would lead to recession. So RBI has to follow a slow and steady path. Both RBI and Finance Ministry would desire to attain highest possible growth. This is possible only by sustained monetary stability i.e., by lowering inflation in the long run. The author has a vie that high inflation can promote high growth in the short-run only.

In the new monetary policy framework recommended by Urjit Patel Committee (2016), the CPI has been targeted instead of wholesale price index (PI). The WPI underestimates the inflation rate in the economy because consumers experience CPI rather than WPI. The inflation rate as in double digits during April 2012 to January 2014. In new CPI index, the food prices have a eight of 47.6 percent. In India, the author identifies that the food inflation is occurring because of i) shifting pattern of diets like protein rich products have been demanded more now; ii) high minimum support prices (MSPs) are reflected in food prices. As per Rajan's view point, these high MSPs have not been in the interest of farmers because the input costs are increasing in agriculture due to high inflation rates. Instead of announcing high MSPs, removing middlemen, introducing new technologies to enhance far productivity, making agriculture market free, etc. will help to make agriculture profitable and reduce food inflation rate.

Another objective of RBI after monetary stabilization is enhancement of economic growth rate numbers. The growth can be enhanced by e powering s all and medium enterprises. The small and medium industries in countryside are less affected by global crisis than large industries. To finance these enterprises and remove poverty, we require easy access to financial resources. So this is possible only by financial inclusion and development. he financial inclusion is an essential building block for sustainable economic growth of India. The financial inclusion in India has been encouraged through effective initiatives like Pradhan Mantri Jan Dhan Yojana and Mudra Scheme. India is having one of the safest, cheapest, and alert banking networks across the globe. he payment banks, technology, banking correspondents, and mobile banking are playing an important role in achieving financial inclusion. Along with financial inclusion, consumer protection and financial education for their...

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