Indian bond yields fell on Friday after Rajan's remarks, showing the level of concern about high inflation and investors' anticipation that the RBI will continue efforts to stabilise the economy.
Rajan also expressed hope that a stable government after the Lok Sabha elections will continue the broad fiscal policies of the current regime and India may finally get the Goods and Services Tax, an ambitious indirect tax reform measure.
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The truth is the government and the Reserve Bank enjoy a free, frank and cordial relationship.
Rajan has already warned he does not have a 'magic wand' to deal with India's economic crisis.
"I'm taking a minute to respond... I do respect Raghuram Rajan as a great scholar who chose to be in the central bank in India at a time when the Indian economy was all buoyant," Sitharaman said during the lecture organised by the Deepak and Neera Raj Centre on Indian Economic Policies of the Columbia University.
While achieving an eight per cent retail inflation rate by January 2015 is well within reach, Reserve Bank of India Governor Raghuram Rajan notes there is a second target, of six per cent by 2016.
Inflation is a big concern for India, says RBI chief Raghuram Rajan.
Former Reserve Bank Governor Raghuram Rajan said India will still remain a lower middle country if the potential growth rate remains at 6 per cent annually without any rise in population by 2047 (Amrit Kaal) and will be reaching the end of the demographic dividend by then. Speaking at a programme organised by Manthanon on Saturday, the economist said if the country does not grow faster, it will grow older (demographically) before it gets richer, which means there is the burden of an aging population to deal with also at that point. Rajan said the GDP growth in India for the past two quarters was in the region of 7.5 per cent and if one looks at the labor force participation, it is very low and when it comes to female participation, "it is the lowest in the G20".
Rajan was speaking at a news conference.
Rahul Gandhi hailed the RBI Governor for steering the Indian economy in "difficult times"
Rajan also said the RBI had reduced the current account deficit "substantially".
DBS called Rajan's decision not to seek an extension as a 'negative surprise'.
Raghuram Rajan - the new Reserve Bank of India (RBI) governor - has announced a slew of measures to attract capital flows in the country to provide support to the rupee which has depreciated around 22% in the current financial year.
Retail inflation was at a 25-month low of 8.1 per cent in February.
The government-appointed Financial Sector Legislative Reforms Commission (FSLRC) has recommended a slew of reforms to overhaul the sector.
The Governor of the Reserve Bank of India may need all the suave charm of the fictional British spy to sell that same hard-nosed agenda to a powerful new prime minister.
Minutes after the Union Cabinet approved raising the cap on subsidised liquefied petroleum gas (LPG) cylinders from nine to 12 per connection in a year, Reserve Bank of India (RBI) Governor Raghuram Rajan questioned the decision, suggesting it was "misdirected subsidy".
Analysts say the RBI could resume tightening monetary policy by early next year should inflation remain high, even as the economy is growing below the decade low of 5 percent posted in the fiscal year ending in March.
A few market and economic indicators have begun looking up, thanks to what many term the 'Rajan effect'.
Rajan said that demand needs to be reduced without having severe effects on investment and supply.
Reserve Bank Governor Raghuram Rajan today criticised multilateral institutions like the IMF and the World Bank saying "they are not immune to cognitive capture".
Dr Rajan has clearly sought to establish his credentials as an inflation fighter and the action should be seen as an indication of how monetary policy will operate during his term.
Investors will see that India story actually continues to be a good one, he said.
Over the last two weeks, the RBI has lifted short-term rates to help support the currency
'Too many things happen in India... that is the root of the problem, not Raghuram Rajan'
Former Prime Minister Manmohan Singh's 1991 budget unshackled India's economy, significantly enhancing the economic prospects for hundreds of millions of Indians, first deputy managing director of the International Monetary Fund (IMF) Gita Gopinath said on Friday.
Rajan will be closely working with the RBI governor and the four deputy governors to gain familiarity with the central bank's stance on various issues.
Rajan's comment comes against the backdrop of certain BJP leaders questioning his policies to deal with the current economic woes.
RBI governor Raghuram Rajan is concernedabout the rupee votality.
The Reserve Bank of India had taken steps to tighten liquidity in a bid to curb volatility in the forex market after the rupee fell to a record low of 61.21 to the dollar on July 8.
Rajan, a professor at the University of Chicago, said if the money raised by the government was not spent, it could result in inflationary pressures, pushing up real interest rates. The problem could get aggravated if foreign capital flows rose, said Rajan, who was in Mumbai to deliver a lecture.
RBI Governor cautioned against more volatility.
Former RBI Governor Subbarao blamed Chidambaram for undermining the autonomy of RBI and putting pressure on him to cut interest rates.
Rajan's departure from the RBI is an end to 'outside interference' in policy making, government insiders feel.
RBI to ensure loans rate fall
Rupee, he said, is not in shambles and "we should not be overtly pessimistic".
For India, Fitch Ratings has 'BBB-' rating.
He also made it clear that the pre-2005 notes will continue to be legal tender.
People who advocate a rate hike because inflation is very high, even without the food component, have in mind some developed-economy structure, Raghuram Rajan tells Business Standard in an exclusive interview.
As the global economy sways into uncertain territories and domestic prices almost certain to rise, Raghuram Rajan's ideas would have come in handy.
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