Jalan Endorses Reddy'S Gilt-Talk

The Reserve Bank of India (RBI) governor Bimal Jalan yesterday endorsed the view expressed by deputy governor, Y V Reddy, that the securities market has been overheated. He said this while speaking to the press on the sidelines of a seminar on state of the Indian economy organised by Indian Merchant Chambers (IMC).

When asked about open market operation conducted by RBI he said, "As and when necessary we have been doing it, there is nothing unusual about it."

On Tuesday, in response to the steep rise in the securities prices witnessed in the last fortnight, Reddy had stated that the some players were showing "unwarranted enthusiasm."

 

Speaking at the seminar, Jalan called for collective effort for reducing the fiscal deficit. He said, "It can not be just the responsibility of the finance minister. In fact, a campaign on reducing the fiscal deficit has to be taken from all sectors."

He also stressed on the important role played by the services industry in terms of the contribution made towards increasing the countries gross domestic product. He pointed out, "It is a large and a fast growing sector, and most value additions have come from this sector."

Jalan pointed out that the net worth of the three richest Indians is higher than the state domestic product of Bihar or Andhra Pradesh or Karnataka.

"However, bulk of the people are still in the rural area, are still paid lower wages and the bulk of them are still below poverty line," he added.

"India is at the threshold of a major revolution and opportunities are within our grasp. All the constrains that once existed are no longer existing. But a collective effort on lowering the fiscal deficit has to be made," the governor said.

Earlier during the same seminar, Rakesh Mohan, director general at NCAER said, "Fiscal deficit is the key problem that has been stopping Indian growth. High fiscal deficit affects the entire economy and it is not just a theoretical problem."