Reserve Bank of India Governor Raghuram Rajan commented on India’s economy at Harvard Business School in the U.S. yesterday.
On stalled infrastructure projects:
“The simple fix is we don’t need a manufacturing revolution. We need it in the next 10 years but not now. We need to complete these projects.
‘‘Growth will start picking up because these large projects will start coming onstream.’’
On gold and the current-account gap:
‘‘Gold is an asset that many Indian households prize. People who are richer don’t know about fixed deposit. They want to buy gold. Our gold imports started surging over the last 10 years as people became more prosperous. That creates a problem because we import all our gold.
‘‘Take out gold and our current-account deficit becomes healthy. India is sitting on something like 30,000 pounds of gold, all of which is imported.’’
‘‘We need a simpler, cleaner system of regulation. We need to right-size regulation. We need to do it across India. Certainly we’re working on the financial sector to make regulation simpler and more transparent.’’
On India’s banking system:
‘‘We need a better and more transparent framework and we’re doing that.
‘‘We are creating more opportunities but bringing in more entrants. This is part of making the banking system more competitive.
‘‘We need people who need money to pay it back and we need to know who is not paying it back and why. We need to reduce the amount of strategic default in the country.
‘‘My hope is over the next few years we transform the financial landscape.’’