Fostering Innovation is Key for Improving Business Environment: Raghuram Rajan

India can be far more successful and far more influential than it is today, mentioned Dr Raghuram Rajan, Governor, Reserve Bank of India (RBI) while delivering his key note address at the fourth C K Prahalad Memorial Lecture organized by Ananta Aspen Centre and Confederation of Indian Industry (CII) in Mumbai. Dr Rajan further mentioned that in the difficult times, environment for growth has to be achieved in the right way by working hard towards recovery and aiming at sustainable growth.  While the monetary policy will be accommodative there is room to expand sustainable growth potential. By continuing with reforms that the government and regulators have announced a sustainable growth potential can be achieved.

Speaking about RBI’s key task to support growth he mentioned that it would focus on keeping the interest rates low in the near term as well as future to have a moderate interest rate regime to help borrowers as well as the savers. It will also focus on cleaning up the banking sector of the distressed assets, so that it can fund the growth agenda. He also suggested that India must resist special interest rates for targeted stimulus, long tax breaks, subventions, subsidies, directed credit, all of which historically rendered industry un-competitiveness with government over extended and country incapable of gaining its rightful position among nations.

Mentioning about what RBI is trying to do and what more it needs to do in improving the environment of the financial sector Dr Rajan, elaborated on four aspects like, need to foster competition and innovation; creating hospitable environment to those who don’t belong to the club; dealing with distress for improving structures and strengthening human capital in the financial sector.

Mr Rahul Bajaj, Chairman, Bajaj Auto Ltd, while delivering his welcome remarks mentioned that financial sector reforms should be a continuous process so that they are aligned and are future ready. He further elaborated that the role of reforms pertaining to financial sector should be to align rules and requirements among the multiple regulators so as to simplify; enable innovation and productivity in business for the benefit of customers and shareholders; stabilize the regulatory environment, create consistent and visible guidelines, and reduce risk amongst market participants and in the overall system in general and upgrade skills within the regulators through a healthy interaction and cross-pollination with private sector.

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