Raghuram Rajan, the Chief Economic Advisor of the Finance Ministry, Government of India, was in Chennai, to deliver the Kuruvila Jacob Oration on education. And, when the floor was open to a controlled Q&A session, the inevitable topics came up: Rupee and gold.
Rather than brush the question away as ‘outside the syllabus,’ Rajan began to give a calibrated answer, on predictable lines, such as that some people see gold as investment, and that as people get richer they want to buy gold, and also that the RBI is working very hard at bringing down the level of inflation. He agreed that we should create more attractive instruments, which provide people an alternative investment to gold or housing. “We are working on this. We have inflation-indexed bonds, and equity-linked deposits.”
As the economy does better, equity will be attractive, and as inflation comes down, fixed-income assets will look attractive, Rajan noted. On the weakening Rupee, his view was that the problem has been building up some time, and so the solution does not happen overnight.
While all that should be some macroeconomic-gyan for startup entrepreneurs, what can be of interest is the exhortation of Rajan to look beyond the immediate. “When people look at India, they look 3, 5, 10 years ahead – and they say there is so much opportunity, so many good things can happen in this country. That’s what we should be looking at,” he began.
Because, once the virtuous cycle starts – once we see more growth, once we see lower inflation – a lot of the things that we see as problems get taken care of, reasoned Rajan. “And we have to work at fixing those problems. But I will not be overly pessimistic and say there is no fix.”
So, how are you, as an entrepreneur, looking at India? Post your comment. I’m sure Rajan will be happy to know!