Rajan effect at WEF!

Reserve Bank of India governor Raghjuram Rajan showed his charisma at World Economic Forum. As WEF kicks off at Davos, the world's anxiety towards the revival of the economy overshadowed any positive feeling that few held. But Rajan, with his sheer confidence instilled the hope again.

Rajan attributed the crashing stock market to jitters. "Everybody is looking at everybody else and saying, "Is this the point where they take the money off the table?' because markets have moved up quite a bit. So that's part of it. Part of it is wondering what is really happening in China, why did the Renminbi start moving a little, and is there more to come? And of course the oil price, how far will it go and does it affect some entity, some lever entity somewhere, which has oil exposure, and does that create problems? So I think some jitters are really jitters about jitters, and some is really wondering about fundamentals," he said.

He is even confident that nothing has changed over the last few weeks that would suggest that the world economy is declining. He doesn't think the fundamentals of the global economy justify the decline in asset prices.

"It's hard to tell what the right level for asset prices are, but is there something that changed dramatically over the last few weeks that would say the world economy is heading downwards? I don't think so. In fact, there is a fair amount of sense that, yes, we're trudging along more slowly than we should, but it's not the abyss that we're looking at," he said.

Rajan even said the rest of the world is facing a deflationary environment, and so to that extent, it helps India disinflate. At the same time he pointed out the role of the strong rupee and said there’s more to be done for further growth.

(Image credits: indiatimes)