Wednesday, October 30, 2013
India Can Achieve Double-Digit Growth: RBI's Rajan
MUMBAI (Nikkei)--The Indian economy could grow at 10%, double last fiscal year's rate, given progress on infrastructure and other challenges, central bank chief Raghuram Rajan said Tuesday in an interview.
Action is needed on three fronts, Rajan told The Nikkei: infrastructure, skill-building and business regulations.
Elaborating on the last point, he argued that "we have to find a way to streamline regulations ... without compromising" on them.
"We will also need to examine whether we have excess regulations in some areas," Rajan said.
- Raghuram Rajan
The Reserve Bank of India has pivoted against inflation since Rajan took charge in September. This was apparent in the central bank's decision Tuesday to raise its policy repo rate by 25 basis points to 7.75%, the second rate hike on his watch.
The RBI lowered interest rates three times in a row from January to May. Then came a drop in the rupee that put upward pressure on prices. Many see deeper, structural causes of India's inflation, such as underdeveloped infrastructure that makes moving goods needlessly expensive.
Containing inflation with interest rate increases will help lay the groundwork for growth, Rajan said.
India's gross domestic product grew 5% in the year ended March 31, the slowest rate in a decade and significantly slower than the 8% of yesteryear.
(The Nikkei, Oct. 30 morning edition)