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RBI governor moots new mantra to resurrect Indian economy

An evaluation of the performance of India's economy in the perspective of global reality will lead us to the conclusion that India has not fared badly at all, says Reserve Bank of India Governor Bimal Jalan.

This was in light of the global economic situation at its worst. Economies of most countries are in a shambles. The crisis, which took a heavy toll of the Asian tigers in the past year, has now mauled Russia and Japan and is threatening to engulf Germany and other members of European Union. Only one country, which has managed to escape the global sweep of this ill-wind, is the United States, he says.

Addressing a meeting of the Indian Merchants Chamber in Bombay on Saturday, Jalan said India would have been far worse off had the authorities not come up with measured policy responses to global developments from time to time. He sought to focus the attention of the large gathering of businessmen to the positive features of Indian economy and polity.

"Economic activity is no exception to the phenomenon of self-fulfilling prophecy. If all of you believe that India is doomed, indeed the country would be doomed and nothing can save it. Therefore, I request you to consciously nurse a robust confidence in our country's future," he said.

"We have responded to sanctions. We have responded to the aftermath of nuclear blasts. We have responded to the sudden fall in the rupee value. We have succeeded in lowering and stabilising the interest rate at reasonable levels. We are now successfully implementing the government's programme for a massive borrowing. And by now we have achieved more than 75 per cent of the borrowing target. Everything is going on as planned," he said.

"Inflation has somewhat risen uncomfortably, because prices of fruits and vegetables have shot up, mainly as a seasonal feature. But the prices will come down soon as India has received a good monsoon," he added.

Exports are indeed sagging. But consider how Korea increased its exports volume by 18 per cent without earning even an additional penny, he remarked.

Many sectors of industries such as non-ferrous metals, tobacco, chemicals and rubber products which account for more than half of India's industrial production, have performed well and recorded impressive growth. Other sectors like the construction industry, which have been sagging, will revive before long as a result of the policy responses initiated by the government, he said.

One need not get unduly alarmed by the downgrading of India's sovereign rating by Moody's. Look at the way thousands of young Indian software engineers and financial managers are all working, it leaves little room for diffidence, he remarked.

Surely, banks will not be able to lend their funds for equity of infrastructure projects, because they cannot afford to expose their unsecured public deposits carrying fixed interest rates to undue risks. Perhaps the FIs, which have investible resources, may be able to lend a hand, he said.

UNI