Reserve Bank of India (RBI) Governor Y V Reddy, on Saturday, said India was set
to achieve a growth rate of 7.5 to eight per cent during this fiscal, keeping
the inflation in check between five to 5.5 per cent and added that there was no
need for any review of the projections.
Though there may be intra-year differences in the inflation rate, all evidences
with us show that it is possible to contain it in the range of five to 5.5 per
cent for the whole year, he told reporters here.
Though the monsoon conditions were unclear and global risks too existed, the
country was well in position to achieve a GDP growth rate of 7.5 to eight per
cent as originally envisaged, he said.
Asked whether any upward revision in fuel prices would lead to further increase
in bank lending rate, he said “there is no relationship between the two.”
Monetary policy measures were taken, keeping in mind several domestic factors,
Mr Reddy added.
Adverse impact
The RBI governor said though India could not totally be insulated from economic
developments elsewhere, any slowdown in economic growth in the US would only
have a minimal adverse impact on India when compared to other emerging markets.
RBI was closely monitoring the moves of the Central Banks in other countries,
including the US, to assess their impact on the country, he added.
Asked about the increasing fiscal deficit of the Union and state governments, he
said there was no cause for concern. The borrowings by the Centre and states
were well within the projections made in their budgets, Mr Reddy said.
To a query about fuller capital account convertibility, he said an important
recommendation of the committee concerned, which had been put on the public
domain, was that there were gaps between regulatory intent and procedural
aspect.
Measures mooted
He said a set of measures suggested for the year 2006-07 should be initiated in
the next few weeks by the banks, in consultation with the Government, as it was
already September.
Replying to a question, he said there were differences within the committee on
the question of ban on investing in Participatory Notes (PNs) by Foreign
Institutional Investors (FIIs).
