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Raghuram Rajan breaks silence on 80:20, says scheme was brought in to create jobs, boost free trade

Pranay Lakshminarasimhan
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UK financial daily names Raghuram Rajan as a possible contender for Bank of England top job

The article stated that ‘attracting Raghuram Rajan, the highly respected Chicago-based economist and former Reserve Bank of India governor, would be a coup’.

Former Reserve Bank of India Governor Raghuram Rajan on Tuesday broke his silence on the charges levelled against the 80:20 gold scheme that was rolled out in 2014, saying that the scheme was brought in to combat the lack of gold supply and bring back jobs in the Indian jewellery sector.

In an exclusive interview with CNBC-TV18's Latha Venkatesh, Rajan said the government in 2014 was looking to relax import restrictions on gold after the rupee had recovered from 2013's taper tantrum.

The central bank then implemented the 80:20 scheme to allow importers of gold to start importing again but with certain conditions in place.

Asked about the timing of the scheme's rollout -- it was allowed during the changeover in government in May 2014 -- Rajan said the government's 80:20 proposal appeared to follow objective criteria and that its motive was clear: to give a fillip to free trading in gold and create jobs in the jewellery sector.

The former RBI governor also spoke about the recently reported Rs 13,640 crore Punjab National Bank fraud and said that the scam should have been uncovered sooner. He also said that had the RBI had any idea of what was going on at the time, it would have done everything in its power to stop it.

Interview transcript to follow.