I came from USA to India for notes change during demonetisation: Raghuram Rajan

New Delhi, Sep 8: Raghuram Rajan, former Governor of the Reserve Bank of India says he was open to staying on as Governor but the “government did not grant me contract.”

He also said if unprepared, the notes ban can have a chilling impact on the economy. “I conveyed my notes ban concerns to those that mattered.”

Following are the highlights of Raghuram Rajan’s interview with NDTV:

He was asked that as a RBI governor two-year extension was offered, he denied and said they just had to plan it, that’s all and I had a three-year term and the term came to an end. If there had to be an extension, there had to be an agreement with the government but there wasn’t.  The government did not offer me a new contract and that’s where it ended.

When asked was RBI keen to have you back, he replied I am the wrong guy to ask (this). I cannot go into the details of our discussion but there was no agreement in the end.

He said if you’re not prepared on Day 1 with all the currency that’s being replaced – currency is important for economic activity – you will have a chilling of economic activity. You would see a dramatic slowdown of economic activity on the note ban issue.

His opinion on notes ban achievement, “There is the question of whether you can catch the guys that you want to catch and do they find ways around it. I think the worst possible combination of circumstances will be where you don’t catch the guys but you still have the effects on economy.”

‘Indians are good at Jugaad’. “In India working people have coined the word jugaad. We’re pretty good at jugaad. So if you know India well you should recognise that a lot of Jugaad happened – people will find ways around it. Its economic arbitrage with a touch of illegality about it.”

In the interview he was asked on many critical issues:

On the notes ban process

What we have said in the book that after we gave our note, a committee was set up and started the process of discussion. In my view, it never came back to us that here is a decision that you’ve to make or here’s the timing we want to do this scheme.

On new notes

We had started the process of designing the new notes. The new notes – 2000, 500 and a new 1,000 – had been approved in May. To say none (of notes ban prep) was done would be incorrect. But a monetary economist would’ve liked for all the notes to replaced at one go.

We don’t yet know the full effects of demonetisation. Based on information that we have now, ignoring future dividends, the answer is fairly obvious. (no)

On Aadhaar Cards

“I like the process of getting everybody to sign on to their accounts with the Aadhaar number.”

On Gauri Lankesh murder

It’s very unfortunate that a journalist – or anybody – be killed. But it’s too early to draw conclusions. We have to be vigilant that we don’t narrow the space for discussion but let us not worry that the country is going towards only one direction.

Raghuram Rajan on trolls

“We should not let our dialogue be governed by the idiocracy”.

On Indian economy

Efficiency of economic system breaks down with protectionism.

“One of the reason for the rise of populist nationalism is because of a sense of victimisation among the majority community. This leads to long term problems for the economy.”

Wefornews Bureau

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