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<div class="itg-mosimage"><amp-img src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998February%2Fplaying-safe-1_090412022910.jpg" alt="" height="425" width="650" class="" layout="responsive"></amp-img><p>When Bimal Jalan took over as the 20th governor of the Reserve Bank of India (RBI) three months ago, no one expected him to swim with the current. His faith in state intervention was known but so was the fact that the veteran bureaucrat had a mind of his own. But the ferocity with which he has taken on the system - and so soon - has surprised even the cognoscenti.<br></p><p>Apart from hiking the credit reserve ratio (CRR) and bank rates on January 16, the apex bank chief also introduced a series of restrictive measures like a 50 per cent cut in export refinance, lowering of the general refinance limit, raising the import surcharge to 30 per cent and lifting the repos rate to 9 per cent. </p><p>To some, it looked like he was undoing a system that had been painstakingly developed by his predecessor C.R. Rangarajan. "What Jalan has done is in fact announce a mini-credit policy which is contrary to the previous credit policy," says Sunil Bhandare, economic adviser, Tata Services Ltd. But there is a rationale to it too. "With only an interim government at the Centre, a conservative approach was needed and that is what he has taken."<br></p><p>The market-savvy Rangarajan had liberalised the financial and monetary markets through his progressive approach because that was the need of the hour. It would seem that Jalan has preferred to reintroduce controls. But that is only to insulate the country's economy against global uncertainties. </p><p>He came at a time when the sudden crisis in the South Asian markets hit the Indian economy hard. This despite the general boom witnessed during Rangarajan's term. The rupee depreciated, touching the 40.50 mark at one point. Political uncertainty at the Centre meant that no decision could be taken by the interim government to prop up the currency. </p><div class="itemcenter"><amp-iframe height="62" title="" width="320" sandbox="allow-forms allow-scripts allow-same-origin allow-popups allow-top-navigation allow-top-navigation-by-user-activation" allowfullscreen src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Findiatoday%2Fbanner%2Fpreferred-source-new.html%3Fv%3D1.014%5Cu0026native%3D1" class="mrBt15 preferred-source-banner"> </amp-iframe></div></p><p>But it had to be protected too. When the forward premium on the rupee kept increasing, Jalan decided to step in and take matters into his own hands. "Hiking the CRR and bank rates to stop the fall of the rupee is one the best decisions that the RBI has taken," says Mahesh Vyas, executive director, Centre for Monitoring the Indian Economy. Vyas appreciates the adaptability Jalan has shown. "Having a fixed credit policy," he adds, "is outdated."<br></p><p>Unlike past governors, Jalan has not concerned himself with pro-market votaries or waited for the phone to ring. As A.T. Jathak, managing director, Apple Finance, points out, "With this, Jalan showed he was aware of the day-to-day activities, not hesitant to act against anything that is detrimental to the economy." Even the decision to hike bank rates by 2 per cent, says Jathak, may seem harsh but it is better to be doubly sure than sorry.<br></p><p>Not everyone agrees. A section of the industry, for instance, believes that the liquidity squeeze following an increase in interest rates will hit industrial productivity. This at a time when things had been looking up for many sectors. </p><table><tbody><tr><td><div align="center"><b><div class="itg-mosimage"><amp-img src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998February%2Fplaying-safe-2_090412023611.jpg" alt="" height="425" width="650" class="" layout="responsive"></amp-img></div>Marketer Rangarajan</b><br></div><ul><li>As RBI deputy governor, knew the system well.</li><li>Revelled in media publicity.</li><li>Strongly advocated market intervention for the rupee.</li><li>Talked autonomy but toed Central diktats.</li></ul></td><td><div align="center"><b><div class="itg-mosimage"><amp-img src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998February%2Fplaying-safe-3_090412023611.jpg" alt="" height="425" width="650" class="" layout="responsive"></amp-img></div>Conservative Jalan</b><br></div><ul><li>Worked in the IMF and World Bank, but has no hands-on knowledge of RBI. <br></li><li>Media shy.</li><li>Against free flow of the rupee.</li><li>Is in favour of tightening controls.</li><li>Believes in the old regime of swadeshi and self-reliance.</li></ul></td></tr></tbody></table></p><p>According to quick estimates of the index of industrial production, released by the Central Statistical Organisation, industrial growth in November 1997 was 6.1 per cent, up from 3.3 per cent the previous month. </p><p>The consumer durables sector, in fact, had posted a growth of 21.5 per cent that month, up from 9.3 per cent during the previous eight months and the negative 8.7 per cent in November 1996. The manufacturing sector too had done well for itself. "But now," says Harsh Goenka, chairman, RPG Industries, "credit will become expensive and profits will be affected."<br></p><p>Maybe. But an eroding currency would have carried the economy downstream. What's more, the fact that the new package aims at curtailing funds movement into the forex market, for speculation, cannot be ignored. And in any case, as IDBI Chairman S.H. Khan points out, "There wasn't any great rise in credit off take even earlier." </p><p>On the flip side, exporters will be forced to bring their dollar remittances into the country and importers will be further dissuaded. This apart, the immediate impact was that the prices of government securities crashed across the board and the rupee rebounded. This could get money out of the Government and into the private sector.<br></p><p>In fact, Jalan had set himself a defined agenda. Besides keeping a vigil on the inflation rate and making banking rules simpler and compliance higher, his primary concerns were to protect the foreign exchange rate against wild fluctuations and pave the way for the full convertibility of the rupee. </p><p>Unlike Rangarajan, who had the advantage of working in relatively more stable times, the role of the United Front Government was reduced to that of a caretaker days after Jalan took over. But again, unlike his predecessor, he acted on his own without waiting for intervention from the new government. </p><p>Jalan's vast experience as an economic bureaucrat perhaps made things easier. Through most of the '80s, when he was the chief economic adviser to the Union government, his views met with cabinet consent. He has been inseparable from the establishment, having served under various political regimes. </p><p>He was banking secretary under Rajiv Gandhi, finance secretary during V.P. Singh's time, chairman of the Economic Advisory Council under Chandra Shekhar, executive director for India in the World Bank during P.V. Narasimha Rao's tenure and member-secretary to the Planning Commission during the United Front's rule.<br></p><p>The new package announced by Jalan may be bitter for those looking for a panacea for the ills of the Indian economy, but Jalan's actions emphasise that survival precedes dreams of prospective growth. </p><p>As financial consultant A.V.Rajawade observes, "The bank rate hike points to an emergency situation but the new RBI governor has shown his grit to take the challenge head on." Better safe than sorry seems to be the new credo.</p><p>-<b> </b><i>with Sharmila Dhal</i><br></p><div id="tab-link-wrapper-plugin"><div class="authors__container"><div class="authors__by"><div class="authlable">Published By: </div><div class="authdetaisl">AtMigration </div></div><div class="published__on"><div class="authlable">Published On: </div><div class="authdetaisl">Feb 2, 1998</div></div></div><div class="sendros">--- ENDS ---</div></div></div>

economy

Economy

<div class="itg-mosimage"><div class="itgimage"><img  title=""  class="" alt="" src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998February%2Fplaying-safe-1_090412022910.jpg" loading="lazy" /></div><p>When Bimal Jalan took over as the 20th governor of the Reserve Bank of India (RBI) three months ago, no one expected him to swim with the current. His faith in state intervention was known but so was the fact that the veteran bureaucrat had a mind of his own. But the ferocity with which he has taken on the system - and so soon - has surprised even the cognoscenti.<br></p><p>Apart from hiking the credit reserve ratio (CRR) and bank rates on January 16, the apex bank chief also introduced a series of restrictive measures like a 50 per cent cut in export refinance, lowering of the general refinance limit, raising the import surcharge to 30 per cent and lifting the repos rate to 9 per cent. </p><p>To some, it looked like he was undoing a system that had been painstakingly developed by his predecessor C.R. Rangarajan. "What Jalan has done is in fact announce a mini-credit policy which is contrary to the previous credit policy," says Sunil Bhandare, economic adviser, Tata Services Ltd. But there is a rationale to it too. "With only an interim government at the Centre, a conservative approach was needed and that is what he has taken."<br></p><p>The market-savvy Rangarajan had liberalised the financial and monetary markets through his progressive approach because that was the need of the hour. It would seem that Jalan has preferred to reintroduce controls. But that is only to insulate the country's economy against global uncertainties. </p><p>He came at a time when the sudden crisis in the South Asian markets hit the Indian economy hard. This despite the general boom witnessed during Rangarajan's term. The rupee depreciated, touching the 40.50 mark at one point. Political uncertainty at the Centre meant that no decision could be taken by the interim government to prop up the currency. </p><div class="itemcenter"><iframe scrolling="no" allowfullscreen="" frameborder="0" width="100%" height="62" awidth="320" aheight="62" amplayout="fixed" src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Findiatoday%2Fbanner%2Fpreferred-source-new.html%3Fv%3D1.014" class="preferred-source-banner" loading="lazy"></iframe></div><style>.preferred-source-banner{  margin-top: 10px; margin-bottom:10px;}</style></p><p>But it had to be protected too. When the forward premium on the rupee kept increasing, Jalan decided to step in and take matters into his own hands. "Hiking the CRR and bank rates to stop the fall of the rupee is one the best decisions that the RBI has taken," says Mahesh Vyas, executive director, Centre for Monitoring the Indian Economy. Vyas appreciates the adaptability Jalan has shown. "Having a fixed credit policy," he adds, "is outdated."<br></p><p>Unlike past governors, Jalan has not concerned himself with pro-market votaries or waited for the phone to ring. As A.T. Jathak, managing director, Apple Finance, points out, "With this, Jalan showed he was aware of the day-to-day activities, not hesitant to act against anything that is detrimental to the economy." Even the decision to hike bank rates by 2 per cent, says Jathak, may seem harsh but it is better to be doubly sure than sorry.<br></p><p>Not everyone agrees. A section of the industry, for instance, believes that the liquidity squeeze following an increase in interest rates will hit industrial productivity. This at a time when things had been looking up for many sectors. </p><table style="margin-left: 8px; background-color: rgb(229, 229, 229);" align="right" border="1" cellpadding="3" cellspacing="3"><tbody><tr style="" dir="" align="" background="" bgcolor="" height="" lang="" valign="top" xml:lang=""><td scope="" style="width: 200px;" dir="" align="" lang="" valign="" xml:lang=""><div align="center"><b style="color: rgb(204, 0, 0);"><div class="itg-mosimage"><div class="itgimage"><img  title=""  class="" alt="" src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998February%2Fplaying-safe-2_090412023611.jpg" loading="lazy" /></div></div>Marketer Rangarajan</b><br></div><ul><li>As RBI deputy governor, knew the system well.</li><li>Revelled in media publicity.</li><li>Strongly advocated market intervention for the rupee.</li><li>Talked autonomy but toed Central diktats.</li></ul></td><td scope="" style="width: 200px;" dir="" align="" lang="" valign="" xml:lang=""><div align="center"><b style="color: rgb(204, 0, 0);"><div class="itg-mosimage"><div class="itgimage"><img  title=""  class="" alt="" src="https://ancillary-proxy.atarimworker.dev?url=https%3A%2F%2Fakm-img-a-in.tosshub.com%2Fsites%2Fmedia2%2Findiatoday%2Fimages%2Fstories%2F1998February%2Fplaying-safe-3_090412023611.jpg" loading="lazy" /></div></div>Conservative Jalan</b><br></div><ul><li>Worked in the IMF and World Bank, but has no hands-on knowledge of RBI. <br></li><li>Media shy.</li><li>Against free flow of the rupee.</li><li>Is in favour of tightening controls.</li><li>Believes in the old regime of swadeshi and self-reliance.</li></ul></td></tr></tbody></table></p><p>According to quick estimates of the index of industrial production, released by the Central Statistical Organisation, industrial growth in November 1997 was 6.1 per cent, up from 3.3 per cent the previous month. </p><p>The consumer durables sector, in fact, had posted a growth of 21.5 per cent that month, up from 9.3 per cent during the previous eight months and the negative 8.7 per cent in November 1996. The manufacturing sector too had done well for itself. "But now," says Harsh Goenka, chairman, RPG Industries, "credit will become expensive and profits will be affected."<br></p><p>Maybe. But an eroding currency would have carried the economy downstream. What's more, the fact that the new package aims at curtailing funds movement into the forex market, for speculation, cannot be ignored. And in any case, as IDBI Chairman S.H. Khan points out, "There wasn't any great rise in credit off take even earlier." </p><p>On the flip side, exporters will be forced to bring their dollar remittances into the country and importers will be further dissuaded. This apart, the immediate impact was that the prices of government securities crashed across the board and the rupee rebounded. This could get money out of the Government and into the private sector.<br></p><p>In fact, Jalan had set himself a defined agenda. Besides keeping a vigil on the inflation rate and making banking rules simpler and compliance higher, his primary concerns were to protect the foreign exchange rate against wild fluctuations and pave the way for the full convertibility of the rupee. </p><p>Unlike Rangarajan, who had the advantage of working in relatively more stable times, the role of the United Front Government was reduced to that of a caretaker days after Jalan took over. But again, unlike his predecessor, he acted on his own without waiting for intervention from the new government. </p><p>Jalan's vast experience as an economic bureaucrat perhaps made things easier. Through most of the '80s, when he was the chief economic adviser to the Union government, his views met with cabinet consent. He has been inseparable from the establishment, having served under various political regimes. </p><p>He was banking secretary under Rajiv Gandhi, finance secretary during V.P. Singh's time, chairman of the Economic Advisory Council under Chandra Shekhar, executive director for India in the World Bank during P.V. Narasimha Rao's tenure and member-secretary to the Planning Commission during the United Front's rule.<br></p><p>The new package announced by Jalan may be bitter for those looking for a panacea for the ills of the Indian economy, but Jalan's actions emphasise that survival precedes dreams of prospective growth. </p><p>As financial consultant A.V.Rajawade observes, "The bank rate hike points to an emergency situation but the new RBI governor has shown his grit to take the challenge head on." Better safe than sorry seems to be the new credo.</p><p>-<b> </b><i>with Sharmila Dhal</i><br></p><div id="tab-link-wrapper-plugin"><div class="authors__container"><div class="authors__by"><div class="authlable">Published By: </div><div class="authdetaisl">AtMigration </div></div><div class="published__on"><div class="authlable">Published On: </div><div class="authdetaisl">Feb 2, 1998</div></div></div><div class="sendros">--- ENDS ---</div></div></div>

Unlike his predecessors, Governor Bimal Jalan does not wait for state intervention but reintroduces controls on his own to check the further fall of the rupee.

India Today

Playing safe - India Today

RBI Governor Bimal Jalan reintroduces controls on his own to check further fall of rupee

Playing safe

The Centre has sharply accelerated the deactivation of Aadhaar numbers linked to deceased persons, striking off over 2.5 crore IDs—more than the previous 14 years combined. 

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By working closely through diplomatic engagement, trade and cultural cooperation, Musawa believes that both nations can play a leading role in shaping a future where developing countries have a louder voice on the world stage.

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A video of a street dog running with a police vehicle on Marine Drive, Mumbai, has highlighted the unique bond between the animal and the police officers patrolling the area.

mumbai street dog

This stray dog regularly tags along with Mumbai Police at Marine Drive

A city council meeting in Frisco, Texas, turned into a verbal clash between right-wing critics and Indian-origin citizens. While the right-wing participants alleged that Indians were committing visa fraud by acquiring H-1B visas and displacing American citizens, the Indian attendees argued they were being generalised as a community and their presence was a net benefit for the American city. 

The council meeting in the city of Frisco saw right-wing critics and Indian citizens clash over allegations of H-1B fraud and Indian population surge.  

Indian takeover of US city: Right-wing turns Frisco council meet into H-1B showdown

Britain has given Air India a week's deadline to submit a complete response, or face regulatory action against it and its fleet of 33 Boeing 787s.

Air India flight

Air India probes crew compliance after Boeing 787 fuel control switch issue

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In this address, Prime Minister Narendra Modi outlines India's trajectory towards becoming a developed nation, emphasizing that the country has reached a decisive stage in its journey. He highlights that 'The world is moving very fast towards a new world order,' with India positioned as a reliable 'Vishwa Mitra' or global friend. The Prime Minister notes that while many developed nations are aging, India’s strength lies in its youthful population and significant talent pool. He contrasts the current economic stability—characterized by high growth and low inflation—with the previous 'Fragile Five' status, noting India's progress toward becoming the world's third-largest economy. Modi also mentions recent 'future-ready' trade deals, including significant negotiations with the European Union, and asserts India's role as a leading voice for the Global South on the international stage.

World moving towards a new world order: PM Modi in Rajya Sabha

Opposition leaders staged a walkout from the Rajya Sabha during Prime Minister Narendra Modi's reply to the Motion of Thanks to President address on Thursday.

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Here's the drone visuals of the massive traffic jam on the Mumbai-Pune Expressway, which has hit vehicular movement for over 24 hours after a gas tanker overturned in the hilly Khandala Ghat section.

drone

Watch: Drone visuals of massive 22-km traffic jam on Mumbai-Pune Expressway

Addressing the Lok Sabha, Union Commerce Minister Piyush Goyal said the government has successfully safeguarded sensitive sectors in US trade deal.  

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RBI Governor Bimal Jalan reintroduces controls on his own to check further fall of rupee

Unlike his predecessors, Governor Bimal Jalan does not wait for state intervention but reintroduces controls on his own to check the further fall of the rupee.

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