India : New RBI governor Urjit Patel’s views on key topics
India named Urjit Patel, a Reserve Bank of India insider, as the bank’s next governor, effective on Sept. 4, signalling continuity in the policies championed by outgoing head Raghuram Rajan.
Patel has given few speeches or media interviews, though he has written for Brookings Institution as a non-resident Senior Fellow.
Below are some of his views on various issues, compiled from speeches and reports over the past few years:
ON BANK LENDING
- Need to examine metric for effective lending, prioritise loans to enterprises which will generate more employment
- A much larger number of small business loans should be encouraged rather than an overriding emphasis on very large loans
- Finance for small entrepreneurs, SMEs and employment creation may be reinforced
- Banks may have to revisit the individual company/group credit exposure limits, as well as sector exposures as part of better risk management practices
- Bringing down government-induced aggregate demand in budget proposals helps bring down inflation expectation, drive private investment in the medium term
- There has been an excessive reliance on monetary policy in the absence of the requisite fiscal retrenchment in the fight against inflation
ON INDIA’S FISCAL POSITION
- One form of expenditure growth mitigation could be a phased expansion in entitlement coverage so that the impact on the budget is spread over several years
ON FOREIGN INVESTMENT
- More stable and durable inward investment can be expected if legislation is passed to allow higher foreign investment in insurance companies in India and to lift voting rights of foreign investors in Indian banks
ON GOODS AND SERVICES TAX
- Implementing a comprehensive GST should not be delayed
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