NewsKarnataka – Mumbai

Mumbai: The Reserve Bank has notified that any political instability after May 2014, post-results, will drag the besieged economy further down, thus  pointing out that only a stable new government would be viable.

RBI Governor Raghuram Rajan said in his foreword to the eighth edition of the RBI’s Financial Stability Report 2013, released on Monday December 30 that a potential additional source of uncertainty in the coming general elections would hamper the situation. Only a stable new government would be positive for the economy, he added.

Adding to his comment Rajan said, “With confidence in the financial system, policy certainty is something that investors look for in the current environment.”

The government is claiming that GDP will grow at over 5 percent but the warning from RBI comes as some political observers are expecting a hung Parliament after the Lok Sabha elections.