NEW DELHI, 7 September 2003 — Y. Venugopal Reddy promised continuity in monetary policy yesterday as he took the helm of India’s central bank.
Reddy took over as governor yesterday for a five-year term at the Reserve Bank of India to replace Bimal Jalan, who was nominated to India’s upper house of Parliament on Aug. 28.
Financial analysts say Reddy has a tough act to follow as Jalan’s tenure has seen India’s foreign exchange reserves grow to a record $85.5 billion, interest rates slide to their lowest level and a stable exchange rate.
Indian businessmen are worried that India’s high fiscal deficit, estimated at 11 percent of gross domestic product for states and the federal government, could put pressure on the central bank to change interest rates currently kept at a three-decade low.
“The Reserve Bank of India believes in continuity,” Reddy said when asked by reporters whether the soft interest rate stance maintained since 2000 would continue.“Even reform is a continuous process. Continuity and change will be mixed appropriately depending on the context,” he added.
