Amid all the celebrations that started due to steep fall in crude, Eswar Prasad sounds a word of caution. Speaking to CNBC-TV18, he said falling crude is good news but why it is falling is not good.
Amid all the celebrations that started due to steep fall in crude, Eswar Prasad sounds a word of caution. Speaking to CNBC-TV18, he said right now lower crude price augurs well for India but one must understand that while falling crude is good news “why it is falling is not good.” He further added that we are now pretty close to crude level that India will not be comfortable with.
Meanwhile, China sent ripples across global markets today, as the Shanghai market tumbled over 5 percent, its biggest daily loss in five years with the turnover touching record levels of USD 128 billion. The fall was triggered by a new government rule barring lower rated bonds as collateral for some short-term loans. The sell-off began in risky debt, and then spread to government bonds and stocks. He said that there is huge credit outstanding in the Chinese economy, and the worrying part is that loan growth is outpacing GDP growth.
On the Modi government’s performance, he said then focus right now appeared to be on good governance with sanitation the top priority. He is hopeful of big package of reforms from team Modi and prefers aggressive steps on the disinvestment front.
He expects the rupee to be volatile and says a mild depreciation won’t hurt the economy much.
Transcript to follow shortly