By : Mohan Verma
RBI Governor visited HP University, Shimla on Thursday and had an interface with the students and faculty of HP University. The Governor answered a wide variety of questions on Indian economy, Reserve Bank of India, monitory policy and inflation in the Indian economy.
The Governor was of the opinion that the reason the current slowdown in the economic growth is partly the global slowdown and partly the fact that the Indian economy had been growing at a faster pace earlier. Hence, because of a higher base effect there is a slowdown. On the issue of containing inflation the governor was of the view that though primary reason inflation are supply side bottlenecks, but because in the short run it is not possible to address the supply side issues, hence to keep a tab on inflation there is no other way except following a a tight monitory policy.
The Governor admitted that one of the reasons for slow economic growth were related to allocation of resources and problems with the institutional mechanism for allocation of resources like spectrum and coal.
Responding an question on UID Adhar Card Scheme the Governor was a view that linking the banking system with the UID will help in keeping a track of the borrows and share the information with the other banks thus the defaulters will not be able to borrow again, this will help banks to check the Non-Performing Assets of Banks.
Regarding the effect of El-Nino on Monsoon and the result increase in food prices. The Governor said it is difficult to predict anything at this moment as the data does not support a co-relation between the two. If there is a poor monsoon and rising food prices the RBI take a note revise its monitory policy accordingly.