Stiglitz praises India's growth initiative with rider

Mumbai, Dec 28: Nobel laureate, Prof Joseph E Stiglitz, today appreciated the steps taken by the country towards achieving inclusive growth in the banking sector, but with a rider.

''Availability of credit in the country's monetary policy should act through the availability of credit and bank behaviour must be taken into account. For starters, the term bank behaviour means the choice given to banks for fixing of the interest rates while lending,'' he explained.

Prof Stiglitz, who was awarded the Nobel Prize in Economics for his pioneering work on 'Analysis of markets with asymmetric information' in 2001, was addressing a select gathering here before leaving for Cochin where he will be attending a function this evening. He spoke on 'Towards a new paradigm for monetary policy.' Giving an example of the neighbouring country, Bangladesh, he said that ''More than 90 per cent of recovery has been witnessed in the country in areas like micro-credit and micro-finance''. Whereas, the same was not true for the larger borrowers, he observed.

Taking a note of the suggestion made by the noted economist who has already served as the chief economist at the World Bank and as a member of the US Council of Economic advisors to the former US President, Bill Clinton, the Governor of the Reserve Bank of India (RBI), Dr Y V Reddy who had hosted the event, said ''We're following the multiple indicator approach and the way in which RBI manages it's policy is vindicated by the observations of Prof Stiglitz.'' RBI, which was passing through it's transition stage, will make sure that the policies being framed by it were non-disruptive, consultative and full of cautions, he added.

UNI