Govt, RBI in talks on more borrowing: Subbarao

The government and the Reserve Bank of India (RBI) are in discussion on additional borrowing programmes and the two together will ensure that they are managed in an efficient and orderly manner, RBI Governor D Subbarao said here today.

However, Subbarao admitted the global situation was uncertain and hence it was difficult to calibrate a roadmap in advance.

“We will manage the calendar of borrowing to ensure markets are not destabilised in any way; we will manage in an efficient and orderly manner,” Subbarao told PTI.

The RBI Governor is here to attend a meeting of central bank governors’ Asian Consultative Council of the Bank of Settlement. Malaysia is the chairman of the grouping.

The governors also attended the 50th anniversary of Malaysia’s central bank, Bank Negara, today. The bankers will attend a brainstorming session on the global financial crisis and the Asian banks’ response tomorrow.

Former RBI Governor Y V Reddy is also here to attend a panel discussion.

Admitting that the Indian economy had been impacted by the global financial crisis, Subbarao said people are asking why the banking sector in India is hit if it is strong, and why exports, which were only 15 per cent of GDP, had been adversely affected.

The answer to both these is “globalisation”, according to Subbarao. “India is more integrated now than before, not only in trade but also in finance,” the RBI governor said, adding that financial integration was deeper than trade integration.

“This has hit the real channel — confidence channel and economy channel,” he added.

The RBI, Subbarao added, had done a lot to inspire confidence in the country’s banking system. He said both conventional and unconventional methods had been adopted.

“We will continue to take appropriate measures as the situation demands,” he stated, concluding that the global situation was “uncertain and it is difficult to calibrate our roadmap in advance”.