Primary task is to restore confidence in economy: PM

Says there is also a need for fresh thinking on fixing macroeconomic targets

Prime Minister Manmohan Singh said here on Saturday the primary task before the government in the wake of the current economic crisis was to restore confidence. Speaking after the release of the fourth volume of the Reserve Bank of India History, Singh said the current crisis could not be compared with the one that hit the Indian economy in 1991 as the country had more foreign exchange reserves in its kitty.

Earlier, after releasing the book at a small function held at his residence, the prime minister said there was need to evolve a degree of national consensus to carry out social and economic change. There was also a need for fresh thinking on fixing macroeconomic targets.

The 30-minute long function had a galaxy of special invitees that included Raghuram Rajan, who would succeed D Subbarao as the next governor of the Reserve Bank of India (RBI) next month, Planning Commission Deputy Chairman Montek Singh Ahluwalia , several former RBI governors, including C Rangarajan (at present, chairman of the PM’s Economic Advisory Council), Y V Reddy (at present chairman of the 14th Finance Commission), Bimal Jalan and A Ghosh, member of the 14 Finance Commission Sudipto Mundle, and former deputy governors of RBI, Rakesh Mohan and Subir Gokarn.

Singh expressed the hope that Rajan would build on the experience of Subbarao and chart out a course of action in a difficult economic situation.  Pointing out that the history of RBI was the history of the country’s growth process, the prime minister said the central bank through its work had done the country proud. “RBI has served the country well, but the best is yet to come.”

In his welcome address, Subbarao said price stability, one of the goals of RBI, was important for achieving growth. However, monetary policy independence could be constrained by the government’s fiscal policy stance, he added. Recalling his conversation with the prime minister when he took charge of RBI as its governor in 2008, Subbarao said Singh had advised him to keep his ears close to the ground and not lose touch with reality.

The fourth volume of the RBI History recounts India’s dramatic economic policy story from 1981 to 1997. In the process, it covers one of the most eventful phases of the central bank. The governors at the helm in this period were Manmohan Singh, A Ghosh, R N Malhotra,  S Venkitaramanan and C Rangarajan.