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Reserve Bank of India (RBI) Governor Raghuram Rajan moderated a panel discussion on Friday, just 48 hours before releasing the first quarter monetary policy.
He did not give any indication about how the rates would move on Monday, but managed to touch on most key issues concerning the Indian economy and some beyond.
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.
He kept to his promise, but even as he did so he got the panel to discuss the level of non-performing assets (NPAs) in the Indian banking sector to the subject of jobless growth and the social tension which it creates.
The governor surprised ICICI Bank CEO 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 Planning Commission. Rajan has written about the need to provide jobs for the low-skilled labour by amending the Apprentice Act in the Economic Survey for FY13. Maira said skill deficit 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 would redistribution of the economic pie help more if that happened?
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