Narendra Modi at Financial Inclusion Conference of RBI

Rajan ‘perfect’; Govt, RBI think on similar lines: Modi

Amid a widespread perception about differences between RBI and the government, Indian Prime Minister Narendra Modi on Thursday praised Governor Raghuram Rajan for being “perfect” in explaining to him complex economic issues and said there was similarity in thinking on both the sides.

Stating that Rajan would explain implications of RBI’s policies in “just three-four slides”, Modi also said that he must have been a very good ‘teacher’ in the past.

Rajan, who has been Professor of Finance at University of Chicago and joined RBI as its Governor in September 2013, said on his part that there has always been a “constructive dialogue” between RBI and the government.

There have been talks from time to time about differences between the central bank and the government on a range of issues including on inflation and interest rates.

While the government and RBI have always maintained that there were ‘no differences’ between them, some proposals in this year’s Budget indicated shifting certain functions out of the central bank’s ambit including on the public debt management.

Speaking at a function to mark 80 years of the Reserve Bank of India (RBI), Modi expressed satisfaction over the role played by the central bank under Rajan.

“There is lot of similarity between the thinking of the RBI and government… This is absolutely essential. As a representative of the government, I express my satisfaction.

RBI is performing its role and I congratulate Raghuram ji and his team,” he said.

At the same function, Finance Minister Arun Jaitley also congratulated Rajan, his team and past RBI Governors for their contribution in making the country’s economy resilient.

Recalling his bi-monthly meetings with Rajan, Modi said he is “perfect” in explaining the implications of the policies and would do so in just three-four slides.

Modi said he himself was not adept at understanding economic issues, but as the Prime Minister he had to learn and understand complex issues.

In his address, Rajan said: “There has always been a constructive dialogue between the Government and the Bank, informed by their respective time horizons and attitudes towards risk.

“And history records that successive governments have invariably appreciated the wisdom of the Reserve Bank’s counsel.”

Modi tells banks to be considerate in giving loans to poor

Concerned over rising incidents of farmer suicide, Prime Minister Narendra Modi on Thursday nudged banks to be considerate in giving and recovering loans from poor saying banks would not shut by helping them.

“As RBI celebrates 80 years, can we think within ourselves that we will expand our banking sector so much that farmers would not have to commit suicide because of huge debt burden.

Can we not dream of this?… I do not believe that by helping poor a bank will become insolvent,” he said.

Farmers’ plight should “shake the conscience” of the banking sector, he said addressing the 80th anniversary celebrations of the RBI where Finance Minister Arun Jaitley, Maharashtra Chief Minister Devendra Fadnavis and RBI Governor Raghuram Rajan were also present.

“Our farmers commit suicide. The pain of this should not only be restricted to newspapers and TV screens. When farmer dies, does it shake the heart of banking sector? Because of taking loan from money lender, he has to face death,” Modi said.

He also asked the Reserve Bank to prepare a 20-year road map for financial inclusion and suggested that the Indian currency should be printed using indigenous paper and ink.

Lauding the efforts of Reserve Bank in improving macroeconomic conditions in the last eight decades, Jaitley said that the central bank’s professionalism has served the country well.

Speaking on the occasion, Rajan cautioned the banks against excessive lending to infrastructure sector projects as it may impact their financial stability.

RBI should use Indian paper, ink to print currency: Modi

Indian Prime Minister Narendra Modi wants the Reserve Bank to use Indian paper and ink to print currency notes and set a target date for achieving the objective as part of the ‘Make In India’ campaign.

“Today we are celebrating 80 years of RBI. Can we not fix a date…that on any specific date, whatever currency is being printed, paper will be Indian and ink will also be Indian,” he said at the 80th anniversary celebrations of the Reserve Bank.

It is ironic that the photograph of Mahatma Gandhi, who fought for swadeshi, appears on currency printed on imported paper, Modi said.

‘Make In India’, the Prime Minister said, “should start from here. I believe we can do this”.

Later, RBI Deputy Governor S S Mundra said work on a factory manufacturing currency paper was in advanced stages and the country would soon have notes printed on Indian paper.

“The factory construction is in advance stages and we are confident that in the next few months, RBI will start producing bank notes,” Mundra said.

India imports the paper and ink, and then prints the notes at dedicated facilities. According to experts, use of indigenous paper and currency would also help in curbing counterfeiting of the notes.

According to the information provided by RBI, India prints 2,000 crore currency notes every year and 40 per cent of the cost goes towards import of paper and ink. It mainly imports paper from countries like Germany, Japan and the UK.

Modi wants RBI to prepare 20-year road map for financial inclusion

Indian Prime Minister Narendra Modi on Thursday asked the Reserve Bank to prepare a 20-year road map for financial inclusion and nudged banks to be considerate in giving loans to the poor as also while making recoveries from them, especially farmers.

“RBI will be completing 100 years in 2035…it will be appropriate for the central bank to work on the theme of financial inclusion and prepare a road map for achieving it,” he said while addressing a function to mark the 80th anniversary of the Reserve Bank of India.

The other milestones for achieving financial inclusion could be 150th birth anniversary of Mahatma Gandhi in 2019, 75th year of Independence in 2022, 90th anniversary of RBI in 2025 and 100 years of RBI in 2035, the Prime Minister said.

“These are four important dates…we can create a road map for financial inclusion,” he said, adding that the financial inclusion should not remain a government programme but should become “an article of faith”.

Expressing concern of farmers’ suicides and the plight of the poor people in the country, Modi asked the bankers to be considerate in providing financial assistance to poor.

Farmers’ plight should, he added, shake up the conscience of the banking sector.

“Our farmers commit suicide. The pain of this should not only be restricted to newspapers and TV screens. When farmer dies, does it shake the heart of banking sector? Because of taking loan from money lender, he has to face death,” Modi said.

The Indian Prime Minister also called upon the bankers to extend credit to resource rich eastern states.

Nudge staff to give up LPG subsidy: PM to banks, corporates

Indian Prime Minister Narendra Modi on Thursday asked banks and industrial houses to nudge their employees to give up subsidised LPG, saying if one crore people surrender it, an equal number of poor families would get the benefit of this clean energy.

Modi had recently launched ‘Give It Up’ campaign, asking well-off people to surrender their LPG subsidy.

Addressing the 80th anniversary of the Reserve Bank here, he said so far about two lakh consumers have joined the initiative.

There are about 15.3 crore LPG consumers in the country.

“I believe that our banks should take all their employees in confidence. Every bank should resolve that their employees would give up the subsidy. All industrial houses should decide that their employees would give up subsidy,” Modi said.

The Prime Minister said that the government’s intention behind the campaign is not to add to its coffers by saving on subsidy bill, but to provide LPG cylinders, a clean energy, to poor households who use firewood for cooking.

“Give up voluntarily. If one crore people give up this gas cylinder subsidy… one crore poor families who burn firewood, which leads to deforestation, carbon emission (and) their children grow up in smoke… The cylinder (subsidy) you give up should reach to the house of that poor,” he said.

Since the government started the new scheme of direct benefit transfer (DBT) for cooking gas, several persons opted out of the subsidy scheme.

Modi also said that DBT has brought transparency in cooking gas subsidy which has also checked leakages in the government support programme.

Under the DBT, the subsidy amount is directly credited into the bank accounts of consumers even as they pay full amount for LPG cylinder at the time of purchase.

The government has so far saved Rs 8,000 crore due to subsidy transfer through DBT.

At present, consumers are entitled to 12 refills of 14.2-kg cylinders or 34 refills of five-kg bottles in a year at subsidised rates.

Public sector oil marketing companies (OMCs) have given an option to existing LPG consumers to convert their current domestic LPG connection into a non-subsidised domestic connection.

This can be done by submitting a written request to the distributor or electronically via www.MyLPG.in.

In 2015-16 Budget estimates, petroleum subsidy has been halved to Rs 30,000 crore, from estimated Rs 60,270 crore, in the current fiscal.

Of Rs 30,000 crore for next fiscal, Rs 22,000 crore has been earmarked for LPG subsidy and the rest is for kerosene.