Arvind Panagariya On Electoral Bonds & Expectations From Modi 3.0 | NDTV Profit - video Dailymotion

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16th Finance Commission Chairperson Arvind Panagariya backs electoral bonds. He says Late Finance Minister Arun Jaitley's argument was persuasive, adds that they are better than cash.

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00:00 Arvind Panagriya spoke with us and I asked him where he thinks rate cuts are heading

00:05 as far as India is concerned, should we wait for the Fed and what he expects the Fed to

00:09 do?

00:10 Listen.

00:11 So, first inflation, I'm quite okay.

00:15 You know, we are currently 5.1 percent if I go by the monthly figures in January and

00:20 February.

00:21 I've never been an inflation hawk in the sense of, you know, taking it down to 2 percent

00:29 or 2.5 percent, 3 percent.

00:32 If we get there without pain and with rising incomes and rising employment, that's all

00:37 good.

00:39 But certainly 5 percent is very much within my tolerance, my personal tolerance limit

00:45 on inflation.

00:46 I, in fact, think that, you know, that kind of inflation generally is helpful because

00:50 in a growing economy, an economy that's growing in real terms, 7 to 8 percent, you need to

00:56 give some space to the prices to adjust, meaning the relative prices to adjust.

01:01 If inflation is extremely low, given the fact that very few prices have the tendency, except

01:07 the agricultural, you know, prices, but that other than that, most other prices don't actually

01:11 fall.

01:13 And so, therefore, the adjustment in the relative prices usually takes place through rising

01:19 prices.

01:20 So, some room for the relative prices, which are ultimately the signals to the investors

01:26 that where should the investment go, there actually is a signal that the relative prices

01:32 pass on to the entrepreneurs.

01:36 It works well if you've got some rising prices of 4 to 5 percent.

01:40 So currently we are 5 percent.

01:41 I'm OK with that.

01:43 On the interest rate question, really, you know, I would really leave it to our central

01:49 bank.

01:50 Reserve Bank of India has really navigated this extremely well.

01:54 I'm generally happy with how they have done it.

01:58 And so, I'd rather not second guess them.

02:00 OK.

02:01 You know, would you be OK second guessing what Mr. Powell has to do, or what he should

02:08 do?

02:09 We're all waiting for the March policy outcome, the March FOMC meeting outcome.

02:15 It's not going to happen in March, but when is the question?

02:18 Do you think that that concern, or how careful the Fed is being, is keeping the world on

02:26 tenterhooks?

02:27 Well, you know, what the U.S. does, or what the Fed does, does impact the entire world

02:37 economy.

02:38 So certainly all of us are waiting for what the Fed will do.

02:42 But on the other hand, there is not a big mystery on Fed's actions, because Fed has

02:47 the policy, generally, you know, pre-announcing.

02:50 And Mr. Powell has already said that, you know, he sees the interest rates coming down

02:55 in the near future.

02:56 Now, you know, if we are talking about, you know, which month is it, that I have no idea,

03:02 you know.

03:05 On that, this is all like the astrological predictions.

03:10 So you have no number penciled in.

03:14 You have no month penciled in, of later in the year, summer, or when we can expect that?

03:24 You know, it will be within this year, whether it will be in the first half of the year,

03:29 second half, that I won't try to guess.

03:32 [MUSIC PLAYING]

Arvind Panagariya On Electoral Bonds & Expectations From Modi 3.0 | NDTV Profit

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