Former Reserve Bank of India Governor Raghuram Rajan on Tuesday said that the country’s foreign exchange reserves are sufficient and India is not facing problems like Pakistan and Sri Lanka because of RBI’s consistent efforts to combat inflation.
“We have sufficient foreign exchange reserves. The RBI has done a good job in increasing the reserves. We are not having problems like Sri Lanka and Pakistan. Our foreign debts are also less” Raghuram Rajan told NDTV.
Rajan, who presently serves on the Tamil Nadu chief minister’s economic advisory council, believes that India’s strong foreign exchange reserves and low external debt make it more resilient to price shocks.
For the week ended July 22, India’s forex reserves were $571.6 billion. According to RBI statistics, India’s foreign debt obligations were at $620.7 billion at the end of March. The external debt-to-GDP ratio declined to 19.9% in March of this year, down from 21.2% the previous year.
Rajan also discussed how the RBI’s interest rate hikes will aid in reducing inflationary pressures.
Analysts expect the Reserve Bank of India (RBI) to hike the repo rate by 35-50 basis points (bps) during its policy meeting this week. The monetary policy committee (MPC) will meet from August 3 to 5.
He also said that the country’s economic growth of 7% for the current fiscal year is “insufficient for the kind of jobs” it needs.
“A lot of this growth is jobless growth. Jobs are essentially Task One for the economy. We don’t need everybody to be a software programmer or consultant but we need decent jobs,” he added.
Rajan explained that there are no quick routes to creating jobs for all Indians. “We have to increase the skill base and education of our people,” he continued. “If we can create the skill base, the jobs will come.”
According to a report by the Centre for Monitoring Indian Economy (CMIE), the total jobless rate decreased to 6.80% in July, down 1% from June and the lowest level since 6.56% in January.
Rural India’s unemployment rate decreased to 6.14% in July, down from 8.03% the previous month. The explanation for this growth is attributed to 9% above-average rainfall in July. According to reports, the rural unemployment rate climbed last month as rainfall was below average and patchy in June.
According to figures for urban areas, unemployment grew in July to 8.21% from 7.30% in June, indicating that this development may only be a temporary relief for India.