While the population has taken it on themselves to contemplate the economic status of the country, the Reserve Bank of India Governor Urjit Patel said there are visible signs of positivity.
In an Interview to live mint, Patel said economic growth is likely to exceed 7 per cent in the last two quarters of FY17-18, as indicated by the Monetary Policy Report released last week.
During the interview, Patel said an upturn is on the cards, adding that business indicators have suggested a forthcoming revival, with industrial production index (IIP) rising steadily. Patel, citing “high-frequency data,” said there is an upturn, particularly in the automobile and two-wheeler sales.
Even as some prominent economists in the country, including former Prime Minister Manmohan Singh, continues to highlight the perils of the ‘note bandi’ exercise, global organizations including the World Bank has come in support of the Modi government’s recent economic measures.
The RBI governor further added that the RBI would do anything possible in its capacity to support India’s speedy growth, but explained that it would not be done at the cost of growing inflation.
He said the RBI, in the mid and long-term aims to keep close to the inflation target of 4 per cent, with 2 percentage point on either side of the goal offers the central bank some flexibility.
Stressing that improving growth levels is the most important function of the Monetary Policy Committee’s scheme of things, the RBI governor added that there is, however, a need to be careful.
“We have to be careful – we should aim at achieving the inflation target without losing sight of supporting economic growth,” he told livemint.
Patel mentioned that in India, the real interest rate needs to be on the positive side to encourage healthy growth of financial savings, adding that macro difficulties are encountered when real interest rates on financial savings become negative for a significant length of time.
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