STATESMAN NEWS SERVICE
Mumbai, 4 September
Dr Raghuram Rajan today assumed the charge at Reserve Bank of India as its 23rd Governor from Dr D Subbarao who welcomed his successor with warm words saying: “No person is more capable to lead the RBI than Dr Rajan at this point when economy remains challenged on many counts.”
The succession comes at a critical juncture, both have admitted. Dr Subbarao, who plans to settle down in Hyderabad, says he would be looking ahead to the central bank’s functioning for next six crucial months since it is RBI’s responsibility to get economy out of the woods. "I wish Dr Rajan all the best,” he said.
The new Governor says he is ready to take up the challenges. On leaving the finance ministry as chief adviser, the new RBI Governor had said: “We have enough ideas. It is just not the currency, it is financial inclusion, it is growth. I think there is a lot to do."
He, however, added that these things are not going to be overcome overnight. “There is no magic wand, but there are undoubtedly solutions to many of the problems that the RBI can tackle and job is to go ahead and do it.”
In his famous book “Fault Lines”, Dr Rajan wrote: “Almost every financial crisis has political roots.”
The business community hopes he would lift capital controls on India Inc which were enforced by his predecessor on 14 August to stem the rupee slide. Under the new rules, the RBI had slashed foreign remittances limit drastically to $75,000 from $200,000. Bankers expect he would do away with mid-quarterly reviews of credit and monetary policy. They keenly await the Governor Dr Rajan’s response.
The currency and equity markets today perked up with optimism, expecting the new Governor to give push to economic revival as he has spoken of “financial inclusive approach.” At 50, he is the youngest central bank chief to take over.
That the markets are looking forward to some confidence boosting credit and monetary policy decisions after the change at Mint Road office of the RBI amply reflected in the change of sentiments on the bourses as well as in the currency market.
The partially convertible rupee, which resumed this morning with a deep cut at 68.10 against one US dollar, bounced back on aggressive selling of American dollars by the central back, dealers on inter-bank foreign exchange market said.
The dealers said the RBI stepped in earnestly stemming further fall in the value of the rupee. The currency had on 28 August tested its lowest-ever level of 68.85/$.
On massive RBI support, the domestic currency rallied smartly as it traded at 66.83/$ in early noon deals. It could not sustain the gain, but looked steadied as it ended the day at 67.07/$ compared with Tuesday’s closing of 67.63 per US dollar, up 56 paise or 0.8354 per cent.
Equities also turned positive on Dalal Street. In the S&P Bombay Stock Exchange Sensitive Index, 29 stocks ended up against one declining. The benchmark index closed 332.89 points or 1.83 per cent up at 18,567.55 points. Nifty of the National Stock Exchange ended 106.65 points up.