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Economy picking up; need more reforms for strong growth: Rajan

Chennai: Confident of economic recovery, RBI Governor Raghuram Rajan today said capital investments are picking up but a stronger growth would require more reforms and clearing bottlenecks for stalled projects.

Rajan, known for critical analysis of macroeconomic trends, however said that subdued exports, primarily on account of global factors, remain an area of concern.

Talking to reporters after a meeting of RBI’s board, the central bank chief said, “I would say (economy is) picking up.
We see some signs of capital investment picking up. There is a continuing need, which the government is trying to address, of putting some of the stalled projects back on track.”

Stating that the Indian economy is in the process of a steady recovery, Rajan said, “Would we want to (grow) faster? Yes, obviously. But we have to work in the areas of bottlenecks and areas where we need reforms to ensure that growth is strong and sustainable.”

Finance Minister Arun Jaitley had said yesterday that India is not satisfied with 6-8 per cent growth and “wants to transcend to another level and aim for 8-10 per cent growth”.

Replying to questions on inflation and its implications on the policy stance of the RBI, Rajan said: “Inflation is always a matter of concern. The news on monsoon front has been good so far. But it is something that we are watching. What we have said is policy stance is contingent on the day, and we are watching the data. We have to watch for the progression of data as we see it.

“…there are variety of projection about what could happen going forward. IMD thinks things will weaken in next 2-3 months. There are private forecasters who thinks it won’t. Let us see what happens. Forecasting is a difficult job and its a little noisy at this point.”

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