Press Esc to close
Wednesday 25 January 2017
News updated at 1:47 AM IST
Weather
Max: 29.5°C
Min : 15.9°C
In Bengaluru
clear sky

Subbarao hits out at govt; blames it for rupee dip, eco woes

Mumbai, Aug 29, 2013 (PTI)

In a forthright "last public lecture" before he retires next week, RBI Governor D Subbarao was today sharply critical of the government, blaming its "loose fiscal stance" for the current economic woes, and warned that the root cause of rupee depreciation is "domestic structural factors."


While the speed and timing of the rupee's depreciation was due to the markets reacting to US Fed announcements, Subbarao said, "We will go astray, both in the diagnosis and remedy, if we do not acknowledge that the root cause of the problem is domestic structural factors."

He said it would be "misleading" to blame recent policy pronouncements of the US Federal Reserve for the decline in rupee, which has slid 23 per cent against dollar this fiscal.

"...there has been a growing tendency to attribute all of this (ferocity of rupee depreciation) to the 'tapering' of ultra easy monetary policy by the US Fed. Such a diagnosis, I believe, is misleading," he said in his last public lecture as RBI Governor.

While some of the growth slowdown was attributable to the RBI's monetary tightening, he said, "India's economic activity slowed owing to a host of supply-side constraints and governance issues, clearly beyond the purview of the RBI."

Blaming the "loose fiscal stance of government during 2009-12" for slow growth and high inflation, he said, "Had the fiscal consolidation been faster, it is possible that monetary policy calibration could have been less tight."

The governor has often been criticised from within the government for his tight money policy at the cost of growth.

The root cause behind the rupee's decline, he said, is a current account deficit that's running well above the sustainable level for three years in a row and may possibly continue at that level for the fourth year this year.

The only lasting solution is to reduce the current account deficit (CAD) to a sustainable level, he said.

"Reducing the CAD requires structural solutions - RBI has very little policy space or instruments to deliver the needed structural solution. They fall within the ambit of the government."

Subbarao, however said, that in the interim "we need to stabilise the market volatility, a task that falls within the domain of the Reserve Bank."

 

Go to Top

Photo Gallery
Actor Shah Rukh Khan travels from Mumbai to Delhi in August Kranti Rajdhani Express while...

Actor Shah Rukh Khan travels from Mumbai to Delhi in August Kranti Rajdhani Express while...

11-month-old Pacific harbor seal named Ziggy. Ziggy was only a day old and still had her...

11-month-old Pacific harbor seal named Ziggy. Ziggy was only a day old and still had her...

Students perform during full dress rehearsal for Republic Day function in Gurugram on Tuesday...

Students perform during full dress rehearsal for Republic Day function in Gurugram on Tuesday...

An expert horse rider from Madhya Pradesh Equestrian Academy showing his skills during full dress...

An expert horse rider from Madhya Pradesh Equestrian Academy showing his skills during full dress...

Army personnels participate in full dress rehearsal for Republic day parade at Indira Gandhi...

Army personnels participate in full dress rehearsal for Republic day parade at Indira Gandhi...

Jammu and Kashmir Police contingent marching past at snow-covered field during full dress...

Jammu and Kashmir Police contingent marching past at snow-covered field during full dress...

A security jawan guards near Taj Mahal in Agra on Tuesday ahead of Republic Day...

A security jawan guards near Taj Mahal in Agra on Tuesday ahead of Republic Day...

A wild elephant separated from its group wanderers in Birbhum forest range on Tuesday...

A wild elephant separated from its group wanderers in Birbhum forest range on Tuesday...

The guided Pinaka rocket is successfully test-fired for the second time from launch complex-III...

The guided Pinaka rocket is successfully test-fired for the second time from launch complex-III...

Tamil film actor Kamal Haasan expressing his support to the student for Jallikattu during a press...

Tamil film actor Kamal Haasan expressing his support to the student for Jallikattu during a press...

Like us on Facebook

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523