Former RBI chief Raghuram Rajan on Monday said he believed that the present valuation of the Indian Rupee is “pretty reasonable” and that any attempts at tinkering with it, including on the export front, may end up backfiring. While speaking at the inaugural session of the national seminar on ‘Equity, Access and Inclusion-Transforming Rural India through Financial Inclusion’ at the National Institute of Rural Development and Panchayati Raj, Rajan said, “The issue of the value of the rupee is a complicated one. Some people think that for increasing exports, the answer is simply devalue the rupee.(…) Cheaper price for my export may allow me to export more, but it also means my imports are costlier and often the exporter imports a lot of what they export. So, it is not obvious that just devaluing helps everybody”, Rajan emphasised in his speech.

Hyderabad: RBI Governor Raghuram Rajan addressing the National Seminar on 'Equity, Access & Inclusion-Transforming Rural India through Financial Inclusion' along with W R Reddy, Director General NIRD PR and Vikas Singh, President Crux at Vikas Auditorium in Rajendranagar near Hyderabad on Monday. PTI Photo(PTI7_18_2016_000024A)

Speaking about the comparison between per capita GDP levels between China and India, he said that whereas at one point in the 1960s, the GDP levels of the two countries were comparable, China has gone way ahead with its GDP levels being almost four times than that of India. This situation can be partially recovered by years of sustained growth along with economic stability.

However, Rajan emphasised that just GDP numbers are not enough to say that the country has developed- there were many other factors like environmental damage which are not measured by GDP. “It would be good if we reach their level of GDP without the kind of environmental damage that has occurred in some parts of China and that is occurring in some parts of India. We have to have environmentally sustainable development path but we will also benefit from having equitable development path,” he said while stressing the need for financial inclusion.

Addressing the issue of farmers’ suicides, Rajan said that credit systems that do not overburden the poor are imperative in order to reduce such nationwide mishaps. Rajan said that the RBI is making efforts to make it attractive for institutions to offer banking services to everyone, as it is a necessary building block for sustainable growth. Observing that bankers usually focus on large borrowers with a certain motive, he said that Aadhaar Enabled Payment System will go a long way in taking financial services to the underserved.

It would be beneficial for the country as a whole if individuals had at their disposal the resources to better themselves, Rajan said as he emphasised the need for financial inclusion. It would be an important element in ensuring access and equity, which are the necessary building blocks for sustainable growth in a country, he said. He pointed out that though India had come a long way in the process of financial inclusion, it still had room for improvement.

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One Comment

  1. Abhinav

    July 22, 2016 at 10:08

    He is not former Governor miss, he is still ” The Governor” of RBI till September. At least do some checks for something this basic and obvious !!


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