Actually, like most Indians who go to foreign lands, Rajan too had carried some Indian currency notes with him while leaving the country after the end of his tenure as the RBI chief in September a year ago to the United States to restart his career as an academician.
Among other things, Rajan also spoke about public sector banks, saying mergers should take place when banks are healthy.
Asia’s third-largest economy aims to trim its fiscal deficit to 3.2 percent of GDP in 2017/18, down from 3.5 percent the year before.
Amid nationwide outrage over the murder of an outspoken journalist, former RBI Governor Raghuram Rajan today said India can not afford to become an intolerant society as tolerance is “extremely important” for its economic growth. The BBB has “not so clearly distinguished in terms of distance from government and to some extent needs perhaps more work to strengthen its autonomy and independence”, he said.
“There was absolutely no date fixed for demonetisation“, Rajan said.
“So long as PSU banks are primarily governed by a board having the ability to change the management… the government via the ministry has dual governance without responsibility”, said Rajan who is now Professor of Finance at the University of Chicago Booth School of Business.
Mr. Rajan had earlier said the short-term costs of demonetisation may outweigh long-term benefits. “My sense was that there was still time to persuade the government otherwise”, he said.
He, however, said that cost of demonetisation was 1-2 per cent of the GDP. “The DFS tends to impose sameness on these banks, we should probably over time need to find ways to get out of”, the former governor said. “I would prefer that we establish another 10 years of very strong growth of 8-10 per cent”.
The central bank said in its annual report last week that 99 percent of those notes were deposited or exchanged for new currency, suggesting that most people, including those who hoarded illicit wealth in cash, have managed to preserve their fortunes.