Subramanian Swamy takes potshots at RBI Governor Raghuram Rajan's policies

Weeks before RBI Governor Raghuram Rajan demits office, BJP MP Subramanian Swamy today took potshots at him saying an IMF working paper has debunked his inflation-centric interest rate policy.

PTI August 19, 2016 17:29:08 IST
Subramanian Swamy takes potshots at RBI Governor Raghuram Rajan's policies

New Delhi: Weeks before RBI Governor Raghuram Rajan demits office, BJP MP Subramanian Swamy today took potshots at him saying an IMF working paper has debunked his inflation-centric interest rate policy.

"Now IMF has in effect debunked that interest rate raising madness of R3 had a role in inflation control. Personal?" Swamy tweeted.

Subramanian Swamy takes potshots at RBI Governor Raghuram Rajans policies

RBI Governor Raghuram Rajan and BJP leader Subramanian Swamy PTI

R3 is the acronym he uses for references to Raghuram Rajan, whom he had on several occasions attacked for keeping interest rate high and hurting growth.

Swamy quoted a Working Paper of the International Monetary Fund (IMF) titled 'What is responsible for India's sharp disinflation?'

Rajan's three-year term comes to an end on September 4. The abstract of the report quoted by Swamy analysed the dramatic decline in India's inflation over the last two years using an augmented Philips Curve approach and quantify the role of different factors.

The paper said contrary to popular perception, the direct role of lower oil prices in India's disinflation was relatively modest given the limited pass-through into domestic prices.

Instead it found that inflation is a highly persistent process in India, reflecting very adaptive consequence. A moderation of expectations and a rationalisation of minimum support prices explained the bulk of the disinflation over the last two years, the IMF paper said.

Swamy had earlier said that Rajan is "not appropriate for the country" and alleged that he has "hiked interest rates in the garb of controlling inflation that has damaged the country".

Amid attacks, Rajan in June surprised the markets when he in a letter to the RBI staff announced that he would return to academia and not seek a second term.

After assuming charge as RBI governor in September 2013, Rajan gradually raised the short-term lending rate from 7.25 per cent to 8 per cent and had retained the high rates throughout 2014.

He kept the rates high, citing inflationary concerns despite intense pressure from the Finance Ministry and the industry for softening them with a view to boosting growth. The governor began the process of lowering the rates in January 2015 and since then it has come down by 1.50 per cent to 6.50 per cent.

Updated Date:

also read

RBI Monetary Policy: Amid Omicron scare, central bank keeps repo rate unchanged at 4% for ninth time
Business

RBI Monetary Policy: Amid Omicron scare, central bank keeps repo rate unchanged at 4% for ninth time

RBI Governor Shaktikanta Das said that the repo rate was unchanged for the ninth consecutive time while maintaining an ‘accommodative stance’ as long as necessary

RBI to release monetary policy today, likely to maintain status quo on key rates; here's what to expect
Business

RBI to release monetary policy today, likely to maintain status quo on key rates; here's what to expect

In the last policy review in October, the RBI had kept the key lending rates unchanged for eight consecutive times

'Aap ne ghabrana nahi:' Pakistan embassy in Serbia mocks Imran Khan over inflation, demands salary; govt says account hacked
World

'Aap ne ghabrana nahi:' Pakistan embassy in Serbia mocks Imran Khan over inflation, demands salary; govt says account hacked

The tweet by the verified account of the embassy mentioned Imran Khan, asking how long does he expect government officials to remain silent in the face of hyperinflation. 'Is this Naya Pakistan,' the post read