Former Reserve Bank of India Governor Raghuram Rajan on Sunday said that the Centre’s goal to make India a $5 trillion-economy by 2024-’25 was “more aspirational than a carefully computed one”, even before the coronavirus pandemic, PTI reported.
In an interview to the news agency, Rajan also warned that the introduction of drastic changes to the monetary policy could upset the bond markets. “I believe the framework [monetary policy] has helped bring inflation down, while giving the RBI some flexibility to support the economy,” Rajan said. “It is hard to think of what would have happened if we had to run such large fiscal deficits without such a framework in place.”
The RBI has the mandate to keep retail inflation at 4%, with a 2% margin on either side. The bank’s Monetary Policy Committee considers this target while deciding on the policy rate. In February, the RBI had kept policy rate unchanged for the fourth time in a row.
Rajan noted that this…
