Syed Zahid Ahmad,
10 August :It is better to see Dr. C. Rangarajan Resigned form as Chief of EAC for the Prime Minister. He might be eying a bright career as consultant for new growing business of financial inclusion.
This way he might also escaped from facing the utter failure of UPA government in economic front with comprising two great economists. Rangarajan in his tenure might have delivered many advices but for last 24 months his advices were not resulting positively. RBI with increasing CRR and Repo rate since July 2006 is helping inflation to grow more on the name of taming inflation. These experts from financial sector hardly evaluate multi tier effects of interest in our economic process. We sincerely need economists who could well design policies for growth of financial sector as well as other segments of the society with prices under control. This is all we meant for real foster inclusive growth – the slogan of our 11th five year plan. Since Rangarajan was not going according to plan, he should have better resigned earlier.
I don’t know what is happening. Our Finance Minister might be bit confused. At one side he says supplies will be increased on the other he supports tight monetary policy by RBI which means for costlier credit supply. The Finance Minster may be asked about how he expects that costly credits are going to help us increasing the supply and reducing the prices. The new produces with costlier credits will certainly add value of credit costs into cost of output. With costly credit fewer will opt to have credit to extend supply capacity. So let our finance minister and RBI explain us that how costly credit is going to increase the supply or minimizing the cost and price of GDP.
What should have been done in fact is to frame a planned policy to allocate FDI to desired segments which has actually increased liquidity in some selected segments which is causing problems for us. So instead of making the credit costly, the regulators should make planned policy to allocate liquidity to desired segments instead of automated. Off course for this they need to do better home work as compared to deliver political statements and press conferences before the media.