India not facing any financing problems, says Raghuram Rajan

Reserve Bank of India governor Raghuram Rajan on Thursday said the country was not facing any external or internal financing issues.

“India can pay off three-fourths of the current account deficit with foreign exchange reserves,” said Rajan while speaking at the John Hopkins University here. He said India had 30,000 tonnes of gold in various forms.

“Gold is a fungible asset. If push comes to shove, we can pay the world in gold,” he said.
He said that the country’s love for gold along with imports of coal and iron ore despite being one of their largest producers blew out current account deficit (CAD). “Levels of 2-2.5% CAD are sustainable in the long run and we are getting closer to it,” he said.

“We are, by no means, anywhere nearing or having any external or internal financing difficulties.

Government credit is good, solid. There are absolutely no difficulties in government borrowing.”

‘I’m independent’
Governor Raghuram Rajan said he feels independent as a central banker. He was responding to a question on the differences between the finance ministry and the RBI.

“We have a healthy dialogue with the government. We both have same objectives on inflation and growth though weights on it and time horizons may differ,” he said. “Sometimes we disagree, However, I feel independent as a central bank governor,” he added.

In his view, it is healthy that the finance minister and RBI governor speak out in public “because that shows that they are not in such close communion that they won’t have any differences in opinion.”