Raghuram Rajan’s balancing act of (im)possible trinity

When Raghuram Rajan took over the charge of the governorship of Reserve Bank of India (RBI), India was facing multiple issues. Because of Federal Reserve bond buying tapering speculation (at that time) hot money started flowing out of the emerging countries and India was no different. In addition to that India's unsustainable current account deficit (CAD) fuelled the bearish sentiment of the Rupee. It was the worst performer among the emerging countries currencies.

Meanwhile, then governor D. Subbarao hiked Marginal Standing Facility (MSF) by 200 basis points to prevent the currency outflow and so called excessive speculation. MSF is the rate at which banks borrow from the RBI in times of tight liquidity and it used to be 100 basis points above repo rate. Markets started speculating about RBI’s next possible move of capital controls, which Finance Minister and RBI governor denied repetitively.

Furthermore, India’s growth rate was (is) at its lowest pace in a decade. Inflation dilemma was continuing due to divergence between high level of CPI and moderate levels of WPI. Everybody was contemplating new governor’s stance on monetary policy at this crucial state of the economy.

Governor Rajan was supposed to prevent free fall of rupee, manage market expectation of not pursuing capital controls and have a monetary policy which is independent of all this. Which is impossible trinity and as name suggest it’s practically impossible to achieve all three at the same time.

In his first monetary policy meeting he took two important decisions.

1. Increasing repo rate by 25 basis points and decreasing MSF rates by 75 points. By doing this he took first step towards managing market expectations of not pursuing capital controls and at the same time he stressed upon the anchoring inflation and inflation expectations. By taking these steps he walked towards achieving two legs of the impossible trinity, i.e. free capital movement and independent monetary policy.

2. Providing the Dollar-Rupee swap facility for dollar funded deposits which helped India to attract nearly $12 billion in less than two months from then. This took care of Indian rupee depreciation and rupee recovered from its lowest levels. Third leg of the impossible trinity talks about fixed exchange rate, in which India doesn’t operate as Indian currency is partially pegged one.

Meanwhile, other factors like tapering postponement and Central government's efforts to curtail CAD also helped the market sentiments.

But credit must be given to governor Rajan as he is doing tricky job of balancing the impossible trinity of free capital flows, exchange rate (managed, not fixed in this case) and independent monetary policy, which is anchoring inflation.

Basic tips for resume and interview

As a part of my job, now I have the privilege of scrutinizing resumes and taking interviews. Over the course of this time I have realised some basic things about resumes and interviews, which may be very common, but not finding them in most of the candidates and their resumes. Here I am mentioning certain basic tips, which we all might know but may not be giving much importance.

Information in the resume should be to the point

·         Nobody in corporate world has time to study candidate’s resume in detail for more than a minute (less than that in most cases) or two.

·         Candidate should always remember his/her resume will be competing with tens of hundreds of resumes.

·         Selecting resumes out of this bundle of resumes need lot of time, so each resume may not get much time.

·         Within first few seconds only resume’s fate will be decided whether to read further or not.

·         Resume’s length shouldn’t go beyond a page or one and half page.

·         Try to use bullet points rather than paragraphs, as information may not be as visible as in bullet points.

·         Don’t put in unnecessary data or information, which is irrelevant to job profile applying for.

·         Concentrate more on skill set, prior experiences, professional achievements, academic career and basic personal information. This doesn’t mean that other things should not be there, but give these things more importance.

·         Follow a flow; it is better to start from skills sets, most recent experience and then in downward order.

·         Better way to forward resume is through referrals rather than sending it through websites or email id provided there. 

Interview is for rejecting

·         You might be thinking that by mistake I would have written rejecting instead of selecting. No, you are wrong.

·         Even though interview is conducted for selecting right candidates, but rejection percentage will be much bigger than that of selection because of high number of applicants.

·         First few minutes of the interview only decides the fate of the candidate, whether to proceed to next level or end it.

·         So always try to give an impression to the interviewer that you are not wasting his/her time.

·         Don’t get panicked if interview is prolonging and grilling. Sometimes it might be a sign that interviewer is interested and wants to test the limits.

·         Candidate should be confident, convincing, logical and clear in communicating his/her thought process.

·         Carefully use words to construct sentences, as most of the times candidate they themselves provide an idea for next question, to be asked while answering previous questions.

·         Please don’t ever bluff in the interview, it’s very difficult outsmart the interviewer.

·         Don’t be overconfident, arrogant, and argue with interviewer.

·     Should be careful about panel interview, as each person in the panel will be an expert in     

     different field and will be looking at the candidate from his/her perspective. So gauge the 

     pattern of questions asked by each individual and tackle them appropriately.