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India Central Bank Chief sees growth returning
May 6, 2014, 6:51 am

Inflation is what is standing in the way of India’s growth, said Raghuram Rajan [Getty Images]

Inflation is what is standing in the way of India’s growth, said Raghuram Rajan [Getty Images]

India’s Central Bank Governor and a former chief economist for the International Monetary Fund, Raghuram Rajan has expressed optimism on India’s growth rate going beyond the 5 per cent mark soon.

“The economy has been growing at a flat rate of 5 per cent and hopefully we will see it picking up in the near future,” he said on the sidelines of a special talk at Oxford University on Monday.

Rajan also reiterated his view on the growth rate being inextricably linked with curbing inflation.

“I have always stressed that stimulating growth and controlling inflation are not opposed to each other. Inflation is what is standing in the way of India’s growth,” he added.

Earlier last month, Rajan hit out at the unconventional monetary policy of developed countries which he said was creating spillover effects in emerging markets, a crisis he described as “not a healthy place”.

Industrial countries are going to do what they have to do; emerging markets have to adjust. I think we need language which is more even-handed. It’s not that emerging markets have infinite ability to adjust and so we should keep that in mind going forward,” he argued.

Prof. Radhika Desai argues that “a serious fault-line is appearing in the rarefied world of central bankers”.

“All the public focus on monetary policy, its unconventionality and its innovations, has served two quite other functions: to perpetuate the heavily finance- (rather the production)-dominated US economic structure and to continue the neoliberal policy regime that created it,” she warns.

India is now the world’s third-largest economy, moving ahead of Japan, latest figures by the World Bank revealed.

China and India account for about 80 per cent of investment expenditure in the Asia and the Pacific region.

 

 TBP and Agencies

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