Friday, December 12, 2008
Six-seven percent growth would be very good for India: RBI
Even a six to seven percent growth would be "very good" for Indian economy, a top central bank official said here Thursday amid fears of the global economic crisis impacing the country.
"Even six percent growth rate or seven percent growth rate is very good, growing on top of three years' nine-percent growth," Reserve Bank of India (RBI) deputy governor Usha Thorat said during a conference organised by the Indian Chamber of Commerce.
India's gross domestic product (GDP) grew by nine percent in 2007-08.
"We still have very high investment rates and high savings rates, therefore, other things remaining same, we should grow at six percent," she said.
While noting that foreign investment has played a major role in the growth story so far, Thorat added: "By and large our growth has been financed by our own domestic savings."
She said the country still have a steady investment rate and the basic growth impetus of the economy cannot be stalled.
Talking about exporters and the worldwide lending scenario, Thorat said: "In a condition where the global credit market has tightened, the entire burden comes on the domestic banks to lend to the domestic industry, which was earlier borrowing from abroad.
"We don't have a dearth of capital, manpower and skill, so therefore, I think we have a potential to harness," she said.
Regarding the cost of funds she said it couldn't come down overnight but it will happen over a period of time.
"There is not much headroom in the fiscal policy," she added.
"Our financial system is in good condition. People have confidence in the financial and banking system," she said.