Govt working on attractive instruments to curb hunger of gold

Express News Service

Chennai:

In a bid to curb the hunger for gold in the country, the government is working on attractive instruments to provide people an alternative source of investment other than gold or housing, according to chief economic advisor of Finance Ministry Prof Raghuram G Rajan.

Delivering the Fourth Kuruvila Jacob Memorial Oration here on Friday, Rajan said that “We are working on those instruments like inflation index bonds, equity linked deposits which number of banks are now peddling for minimum floor return but also has some potential upside.”

“If the economy starts doing better most of all these instruments will start to look more attractive. Equities will look more attractive, fixed income will look more attractive as inflation comes down and this will take off some of the hunger for gold investment,” he said.

Rajan, who is also the Eric J Gleacher distinguished service professor of finance at the Booth School of Business at the University of Chicago, said that India is following a unque path which is different from neighbouring China as well as every other Asian economy which move from agriculture to manufacturing and construction and then to services.

He said the India did not follow the path of its Asian neighbours. “Our manufacturing sector has remained constant in the last 25 to 30 years. There is lot of pessimism about India’s growth. The easiest way to grow is to move people from agriculture to other occupations like manufacturing and services,” he said.

He said there is a belief that India’s growth can happen only through manufacturing as China, South Korea and Japan have grown through manufacturing. “But India does not need to follow these countries, it can follow its own path. We are one of the few countries which has started with democracy and growing with democracy. We should rather emphasise on what we are good and that is services rather than going for a manufacturing revolution,” Rajan said.