New Delhi, Nov 22: Bimal Jalan, who took over on Saturday as the new governor of the Reserve Bank of India (RBI), said that he was "as much a reformer as necessary" in India's efforts to make the rupee move towards capital account convertibility.

In an interview conducted in New Delhi before he took up his new post, Jalan said that India's fundamental economic indicators pointed to a well-managed external account.

He said that India was poised for high economic growth but added that he was not in favour of going "overboard" in foreign borrowings to fuel growth. Asked how fast he expected to move as a reformer, especially on a planned move to make the rupee fully convertible on the capital account, Jalan said: "I am as much of a reformer as necessary."

An expert panel earlier this year laid down a roadmap for India to make the rupee fully convertible by the turn of the century, but the government is yet to set a firm time-table. Jalan declined any comment on the rupee, which fell on Friday against the dollar to a 21-month low of Rs 37.75/80, but added that the fundamentals of the external trade account were strong. "From the external point of view, the critical element is (the) current account deficit. The second point is that we must have currency reserves. And these fundamentals point to a well-managed external account," Jalan said. India's current account deficit for 1996-97 (April-March) is estimated at 1.0 per cent of the gross domestic product (GDP), down from 1.8 per cent in 1995-96.

Foreign exchange reserves are currently around $30 billion, compared with $23.8 billion a year back. "As far as the exchange rate is concerned, I am quite happy with the way Dr Rangarajan has managed it," Jalan said, referring to his predecessor Chakravarty Rangarajan who is scheduled to take up his next job as the governor of Andhra Pradesh. "I don't want to go beyond that now," he said.

In response to a question on the fall in freely-traded currency values across Asia this year, Jalan said that he had not made a detailed assessment so far, but added that the crisis pointed to a need to keep the current account deficit low.

"I think all these (changes), either in the Asian markets or in the cross-currency markets have lessons. Your current account deficit has to be within bounds," Jalan said. In response to another question on the Asian crisis, Jalan said that he would not go "overboard" in encouraging foreign borrowings to fuel growth when economic fundamentals were not strong enough, but added that India's attempts to achieve high economic growth were on firm ground.

"What I am trying to say that if I were given the option of, say, you have high current account deficit and low reserves and you borrow abroad, short-term, long-term, medium-term to build buildings... I would rather not go overboard (like that)," Jalan said. But high growth was a top priority, he added. "I would be extremely concerned about low growth. I want high growth, and I think in the Indian situation it is feasible because we have a high rate of domestic savings," he said. India is aiming to sustain an annual GDP growth rate of 7 per cent in the medium term under its Ninth Plan for the 1997-2002 period. GDP grew by 6.8 per cent in 1996-97 (April-March).

India's gross domestic savings rate was estimated at 25.6 per cent of GDP in 1995-96, up from 24.9 per cent in the previous year.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.