| Date: |
18-01-2016 |
| Subject: |
FM Jaitley, RBI Governor Rajan to highlight India's stability at WEF meetings in Davos |
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MUMBAI: For the first time in many years, an RBI governor and the finance minister will lead India's attempts to market the country as an island of stability amid turbulent seas in the upcoming World Economic Forum meetings at Davos, Switzerland.
Raghuram Rajan, whose international reputation was enhanced by the Indian rupee's steady performance versus the rising dollar last year, and finance Minister Arun Jaitley, who has been emphasising India's macro strengths and its new-found status as the world's fastestgrowing major economy, will get an opportunity to press their points to investors and CEOs wary of an emerging market contagion. This is the first time the two will be seen together in Davos. Rajan did not travel to the Swiss mountain resort last year and Jaitley had not become the finance minister in 2014.
Jaitley will highlight the government's push to enhance public expenditure in physical, social and rural infrastructure, which will take India's growth rate one-and-ahalf percentage points higher than the 7-7.5% expected for the current financial year. India's economy has grown faster than any other despite global economic turbulence, a belowpar monsoon and private sector stress, Jaitley said in November.
"If these issues don't exist and decision-making is faster, it's very much a foreseeable task that we can grow faster to potentially a new normal Indian growth rate," Jaitley had said.
Governor Rajan has won accolades both in India and abroad for ensuring that India was the least volatile emerging market after the Fed rate hike and subsequent market turmoil in China. India has been the least impacted emerging market from the volatilities in China, though the rupee has been under pressure and is trading at levels last seen in September 2013.
How these two financial leaders pitch for India will be closely watched, especially by global credit rating agencies which are keeping a wary eye on India's fiscal deficit target for next year. Rajan and Jaitley will speak on day one of the conference. The finance minister will take part in a discussion on India along with noted economist Nouriel Roubini and Sunil Mittal while Rajan will take part in a discussion on the 'Growth Illusion' along with bankers like Axel Weber of UBS.
Though the government and Jaitley have officially maintained that India will stick to its 3.5% target for the current fiscal, financial markets are nervous about a possible shift in the goal post for FY17 as the government fights a lone battle to prop up growth amid dwindling private sector investment. Moody's is the only agency which revised the outlook on India's sovereign credit rating to "positive" from "stable" last year, taking India a step closer to investment grade.
However, delaying the fiscal consolidation road map could weaken government credibility in the eyes of both rating agencies and foreign investors. Jaitley and Rajan will face the tricky job of reassuring worried investors that stepping up growth could take priority over maintaining fiscal rectitude.
Source : economictimes.indiatimes.com
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