The expectations from the new government when it came to power last year were “probably unrealistic” but it has taken steps to create an environment for investment and is “sensitive” to concerns of investors, RBI Governor Raghuram Rajan said.
“This government came in with tremendous expectations and I think the kind of expectations were probably unrealistic for any government,” Dr. Rajan said responding to questions after his address to the Economic Club of New York.
He said in the minds of the people, 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 “probably not appropriate.”
Dr. Rajan, however, said the government has “taken steps to create the environment for investment, which I think is important.”
The government is “sensitive” to the concerns of investors and is looking into addressing economic issues, he said.
Dr. Rajan’s remarks come as the Modi-led government completes one year in office this month, having received a commanding majority from an electorate that wanted jobs, economic development and respite from rising prices and corruption.
The Reserve Bank of India Governor said a “big part” of the business environment is taxes and the government has said it will not bring retrospective taxation again.
“However once the tax authority levies a demand on you, there is a quasi-judicial nature of that proceeding and therefore it has to go through the courts before it is resolved. The government cannot intervene,” Dr. Rajan said.
“Legacy issues are winding their way through the courts, including issues based on laws that existed before they were changed,” he said.