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Mumbai: The Reserve Bank of India, on Sunday, clarified comments made by governor Raghuram Rajan in London last week, saying that Rajan did not imply that the global economy could slip into a great depression-like scenario.

A speech made by Rajan at the London Business School on 25 June had been reported by sections of the media in a way which suggested that Rajan saw the risk of a depression in the global economy.

“What Governor Rajan did say... was that the policies followed by major central banks around the world were in danger of slipping into the kind of beggar-thy-neighbour strategies that were followed in the 1930s," said the RBI in a clarificatory press release.

The RBI added that Rajan did not imply or suggest that there was any risk of the world economy slipping into a depression. The world economy continues to be in steady recovery, notwithstanding uncertainties like those in the euro area, said the RBI release while summarising Rajan’s view.

“He then called for new rules of the game in the international monetary system, a call that he has made before, and is gaining some traction," said the RBI.

Over the past year, Rajan has often called for greater coordination in the international monetary framework and has called on developed economy central banks to internalize the spillover of unconventional monetary policy decisions on the global economy.

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