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Former Reserve Bank of India (RBI) Governor C Rangarajan advocated maintaining the ongoing hawkish stance by the RBI to tame inflation and expected that the rupee will strengthen with resumption of capital inflow. He also said the country has to clock an 8-9 per cent year-on-year growth for the next five years to achieve the target of a $5-trillion economy. He said ‘the current policy stance should continue. Developed countries are also taking steep rate hikes. I expect more rate hikes’. He noted that the RBI has been maintaining a hawkish stance with rate hikes to tame inflation.

Talking on the rupee trend, RBI Governor said there was a sharp fall in rupee value against the US Dollar to Rs 79-80 with the outflow of capital. He said now, with the inflow of capital, the value of rupee is expected to strengthen but will not reach the pre-COVID levels. There was a positive inflow of Rs 22,000 crore from foreign portfolio investors in August 2022, after months of relentless selling. He also stressed on the need to increase the investment rate to 33 per cent, which has slipped to 27-28 per cent, to achieve a higher growth rate. The share of private investment must also increase.

Asserting that reforms must continue in various sectors like power and agriculture marketing, Rangarajan said that the reform measures undertaken in the 1990s were well-coordinated and had a composite character. He also called for harmony in the Centre-state relationship. He said a consensus building is an integral part as the state and Centre are joint partners in the growth process. Pointing out the labour reforms, he mentioned that it is best during an upswing in the economy. He urged the government to address challenges for adaptation to new technology and issues related to employment generation.