Bank NPAs, growing joblessness worry RBI chief Rajan
29 March 2014Reserve Bank of India governor Raghuram Rajan, moderating a panel discussion in New Delhi on Friday, refused to give any indication about how the rates would move on Monday, when he announces the monetary policy for the first quarter.
Rajan told the gathering facing the panel assembled for the opening of the University of Chicago's Delhi centre that he will take no questions; but he did touch on most key issues concerning the Indian economy and some beyond, triggering discussions on issues ranging from the level of non-performing assets (NPAs) in the Indian banking sector to the growth of joblessness and the social tension which it creates.
The RBI governor surprised ICICI Bank chief executive and managing director Chanda Kochhar, asking for her assessment about the level of NPAs in Indian banks, especially in the public sector. ''Rising NPAs in PSU banks are a concern. Especially in public sector, not in private banks,'' he said.
Rajan will give his take on which way the bad loans are moving as a part of his credit policy.
Kochhar, in her reply, claimed that most of it will improve once the clearances for projects start to flow in. Rajan quipped, ''So you are saying there is no reason to believe that every bad loan is the cost of corruption.''
He also raised the cost of jobless growth with Arun Maira, member of the Planning Commission. Rajan has written about the need to provide jobs for low-skilled labour by amending the Apprentice Act in the Economic Survey for FY13. Maira said skills deficiency is a big gap for the economy but the employers have to pitch in with investments to bridge some of that.
In a question to Randall Kroszner, professor of economics at the Booth School of Business in Chicago University, Rajan wanted to know if the migration of jobs to higher levels of skill is hollowing out the job market globally.
And on the Devyani Khobragade issue he asked Shobhana Bhartia, chairperson and editorial director of The Hindustan Times group, ''Do you believe the foreign policy of the country should be kept out of the foreign ministry?''
Bhartia said the controversy got blown out of proportion particularly because the diplomatic corps decided to take it big.