CENTRAL BANKER OF REPUTE WORLD OVER
Raghuram Rajan only central banker I trust, he should get Nobel in Economics: Marc Faber
At a time when reports of differences between the government and the RBI pop up frequently, governor Raghuram Rajan has received a ringing endorsement of his capabilities as a central banker from Marc Faber, the editor & publisher of the The Gloom, Boom & Doom Report.
In an interview to ET Now, Faber said he did not trust central bankers except that of India’s, since he has a solid grip on monetary policies, while the other monetary authorities around the world were basically money printers.
“Mr Raghuram Rajan is an outstanding man who understands central banking. He is probably only one in the world among the crowds of professors at central banks that actually has a good grip on monetary policies and what you can or cannot achieve with them. He should get the Noble Prize in economics but the others are all money printers at heart, all of them,” Faber said.
Debate has been raging over the RBI governor’s veto power on rate-setting and the government nominating a majority four of the seven-member monetary policy committe, since the revised Indian Financial Code draft released last week appeared to recommend the latter. The government has since said this was only a proposal and that it wasn’t seeking to clip the governor’s wings.
On August 5, when the RBI left the key repo rate unchanged at 7.25%, Raghuram Rajan squelched speculation about a rift with the finance ministry, suggesting that his veto over interest rates was an issue for legitimate debate. In a forceful intervention, Rajan said committees were less prone to making mistakes than personalities and would hold up better against pressure. He added that continuity was another critical element when it came to monetary policy.
“The difficulty in the current system is it personalises the policy,” Rajan said. “Policy is dependent on one person, which means you can make mistakes. Committees would be less prone to mistakes because there is a discussion among people of different hues. Committees are less susceptible to pressure, both internal as well as external pressure. It is harder to push a committee. But I think what is also important is continuity.”