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Raghuram Rajan Lauds RBI, Says India Doesn't Have Economic Problems Like Sri Lanka & Pakistan
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India, 31 July 2022 8:48 AM GMT
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Rajan said, "We have sufficient foreign exchange reserves. RBI has done a good job in increasing the reserves. We are not having problems like Sri Lanka and Pakistan. Our foreign debts are also less."
India has adequate foreign exchange (forex) reserves, and external debts are low. The country is not having economic problems such as Sri Lanka and Pakistan, said Raghuram Rajan, the former Governor of the Reserve Bank of India (RBI).
Rajan said, "We have sufficient foreign exchange reserves. RBI has done a good job in increasing the reserves. We are not having problems like Sri Lanka and Pakistan. Our foreign debts are also less," quoted NDTV.
According to the latest RBI data, India's forex reserves stood at $571.56 billion for the week ended July 22, and external debt stood at $620.7 billion in end-March 2022. The external debt to Gross Domestic Product (GDP) ratio dropped to 19.9 per cent in end-March 2022 from 21.2 per cent in end-March 2021.
What Is The Situation In Sri Lanks & Pakistan?
According to the Ex-Governor, low foreign debt and high foreign exchange reserves make the Indian economy resilient. The countries like Sri Lanka and Pakistan are witnessing deep financial troubles due to deficient forex reserves and mounting external debts.
Recently, the usable forex reserves of Sri Lanka sank below $50 million, pushing the island nation to suspend payments on foreign loans.
The situation in Pakistan is equally problematic. As per the latest data by Pakistan central bank, the country's forex reserves dipped by $754 million to $8.57 billion for the week ended July 22, 2022.
What Is The Inflation Situation In India?
Rajan said on inflation that the RBI's hike in policy rates would help reduce the inflationary pressure.
He said, presently, there is inflation all over the world. RBI is increasing the interest rate, which will help in reducing inflation. The majority of inflation is in food and fuel. He said, as we can see, food inflation is coming down worldwide and will decline in India also.
The former RBI governor mentioned fuel and food as the major factors for high inflation. He said the high food inflation has been due to seasonal factors and is likely to come down.
Retail Inflation, Repo Rate
India's retail inflation relieved to 7.01 per cent in June from 7.04 per cent in the previous month, aided by softening crude and edible oil prices, according to data released by the National Statistical Office (NSO) recently.
Since the beginning of the current financial year, the RBI has hiked the policy repo rate by 90 basis points or 0.90 per cent. In its off-cycle monetary policy review announced in May, the central bank hiked the policy repo rate by 40 basis points or 0.40 per cent to 4.4 per cent.
This was the first increase in the policy repo rate in about two years. The repo rate is the interest rate at which the RBI lends short-term funds to banks.
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