Mumbai, Dec 1 (PTI) The economy is “truly” in a recovery mode and RBI will continue with its accommodative policy to boost growth within the space available under government’s inflation target, Governor Raghuram Rajan said on Tuesday even as he declined to take credit for the uptick.
“What we have is an economy which is well and truly in recovery, but with areas of weakness. Hopefully, as we go forward, some of the areas of weakness will turn around,” Rajan told reporters after the 5th bi-monthly monetary policy review in the 2015-16 fiscal.
The Central Statistical Office on Monday said the economy clipped at 7.4 per cent in the September quarter — 7.2 per cent in the first half of the current financial year. The government has projected 7.6-7.8 per cent growth this fiscal while the RBI has pegged it down at 7.4 per cent on Tuesday with a negative bias.
Rajan, whose anti-inflation stance had last year earned him flak from pro-growth advocates, declined to take any credit for the economic growth though it has been nearly a year since the central bank shifted its hawkish stance.
A variety of factors, including a “feel good” environment created by the government and the surge in public investments, have helped the economy turnaround, he said.
“What causes growth? It’s a mix of factors. I would be far from claiming credit for the monetary policy,” he said.
When reminded of the flak he received, Rajan retorted saying “that doesn’t mean I should take credit when growth takes place”.
“We are all working together to ensure that growth takes place, and it is in our collective interest; and I will emphasise again, the RBI is not against growth. We need sustainable growth and we will ensure maximum sustainable growth we can get,” he said, adding that the inflation limit set by the government defines what is sustainable.
Rajan asserted that the central bank under his guidance continues to be “accommodative” in its stance, but will be vigilant to pick up signs of challenges on inflation.
Earlier in the day, RBI adopted status quo on policy rate, after having cut it by a surprise 0.50 per cent in the last review on September 29. .
