India is getting ready to enjoy its 66th Independence Day August 15, it looks like to be not a moment to celebrate with its economy declining as a result of the global economic downturn and poor governance.
The economic growth worsened greatly to 5.3 % in the first quarter, which was 9.2 percent in the corresponding period last year. D. Subbarao, Governor of the Reserve Bank of India, mentioned clearly in a conversation at an event recently in Thiruvananthapuram last week that the we should concentrate more on controlling inflation rather than aiming substantial growth. The RBI believes that decrease in interest rates would do very little to improve growth. In fact, it concludes that even more decline of the interest rate at this time, instead of encouraging growth,could worsen inflationary pressures.
Last month the RBI cut its growth prediction for this financial year (April-March) from 7.3 %to 6.5 %. This year's discouraging monsoon might negatively effect on the production, inflation and budget. The less monsoon this year will add to problems regarding inflation and sharpened economic slowdown which has been there since late last year. Farming output remains to be more crucial for India than for many other emerging economies.
Looking ahead, the RBI's more aggressive tone indicates that there is a increasing likelihood that the central bank will keep rates unaffected this year.
The economic growth worsened greatly to 5.3 % in the first quarter, which was 9.2 percent in the corresponding period last year. D. Subbarao, Governor of the Reserve Bank of India, mentioned clearly in a conversation at an event recently in Thiruvananthapuram last week that the we should concentrate more on controlling inflation rather than aiming substantial growth. The RBI believes that decrease in interest rates would do very little to improve growth. In fact, it concludes that even more decline of the interest rate at this time, instead of encouraging growth,could worsen inflationary pressures.
Last month the RBI cut its growth prediction for this financial year (April-March) from 7.3 %to 6.5 %. This year's discouraging monsoon might negatively effect on the production, inflation and budget. The less monsoon this year will add to problems regarding inflation and sharpened economic slowdown which has been there since late last year. Farming output remains to be more crucial for India than for many other emerging economies.
Looking ahead, the RBI's more aggressive tone indicates that there is a increasing likelihood that the central bank will keep rates unaffected this year.
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