India

RBI governor predicts of crisis in markets if an unstable govt come to exist in the upcoming poll

Raghuram-Rajan-PTI-Feb27Raghuram Rajan, the governor of Reserve Bank said on Tuesday that the markets have built up high hopes of the elections delivering a stable Government, but cautioned against “some turmoil” in the equity, and perhaps the bond and forex markets, if an unstable dispensation comes to power.
“The issue is that the markets right now are anticipating a stable Government and rapid policy actions. To the extent markets are disappointed, it will reflect on stock markets, perhaps on bond markets, perhaps on exchange markets. We have to be prepared for some turmoil,” he said, speaking at the customary post-policy press conference.
He added that the new Government, which will present its first budget in June, should focus on investments rather than government consumption.
In the Financial Stability Report released in December, Rajan had said an unstable Government will only add uncertainty to the already fragile economy.

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