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Rajan message for politicians

Raghuram Rajan in Calcutta on Wednesday. Picture by Kishor Roy Chowdhury

Calcutta, Dec. 11: Reserve Bank governor Raghuram Rajan has asked political parties to tread with caution on key economic issues and not to indulge in populist measures.

The central banker listed the upcoming general elections to be “the most important reason” not to be complacent at a time the Indian economy was in the process of stabilising.

“I think it would be overtly complacent and possibly dangerous for parties to postpone necessary legislation with the idea that they will pass the bill after the elections,” Rajan said at an event organised by the CII-Suresh Neotia Centre of Excellence for Leadership here today.

The governor will attend the board meeting of the central bank here tomorrow in his maiden visit to the city after taking over the post earlier this year.

“I think its very important from the national perspective that despite signs of stabilisation (of economy), we continue to do what we have been doing, that Parliament continues to pass key bills.

“In particular I would emphasise the need to reduce poorly targeted subsidies such as diesel price in an attempt to create an adequate fiscal window for the new government when it comes,” he said.

Many political parties, including the Trinamul Congress of Bengal, is opposed to linking diesel to market price. It is also opposed to pending economic bills such as allowing more FDI in insurance.

Rajan will not be meeting Bengal chief minister Mamata Banerjee, though traditionally the RBI governor meets the head of the state which he visits.

The governor said there was no guarantee that there would be a stable government after the elections. He warned that politics after the elections would become more challenging for whoever comes to power.

“Any slowdown in putting stalled projects back on track before the election or any additional fiscal slippage ahead of the elections will amplify the large challenges the new government will face,” he said.

He asked all parties to work together to ensure that the government elected in 2014 is able to manage the problems of the economy.

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