With Modi-led government completing one year in office, Raghuram Rajan in a bid to ease the growing pressure on government underscored that the expectations from the government, which received a commanding majority from an electorate that wanted jobs, economic development and respite from rising prices and corruption, were probably “unrealistic”. He pointed that Prime Minister Narendra Modi's image was that of “Ronald Reagan on a white horse” coming to slay anti-market forces and such comparison was not appropriate.
Lauding government’s efforts, RBI governor highlighted that the government had taken steps to create the environment for investment and has been seriously looking into addressing economic issues. He noted government’s decision of doing away retrospective taxation and decision of reducing of corporate tax rate down by 1% every year going forward.
Further, the governor acknowledged the government serious intent to pass the crucial Land Acquisition Bill and the broad consensus it created for the Goods and Services Tax (GST). Rajan also called the government's spending cuts significant, and said there was some amount of fiscal consolidation over and above what the government owned. He, however, said while investment intention and investment were picking up, the pace could have been faster.
The governor though highlighted deeper problem lied in the weak balance sheet of banks, but at the same time acknowledged the efforts that government was taking to push these banks to clean up the balance sheet and at improving the governance structure of the banks, including separate chairman and Managing Director positions.