Former RBI Governor C Rangarajan today said he expects that the economy would grow at 6.5 per cent for the year 2017-18. He also said the job opportunities and economic growth of the country are inter-related. “Jobs (jobs creation) are not independent. They are related to growth when the economy grows jobs also grow. So you cannot talk off jobs separately from growth,” the former chairman of the Prime Minister’s Economic Advisory Council told PTI. “I think the possibility is that the growth will pick up in the next few quarters and one doesn’t know by and one doesn’t know by by how much.. Perhaps by the year as a whole my own estimation is the economy may grow at 6.5 per cent,” the former RBI Governor noted.
The country’s GDP growth rate was pegged at 5.7 per cent for the quarter ended June 30. Rangarajan as chancellor participated in the 7th Convocation ceremony of ICFAI University here. Replying to a query, he said though the liquidity situation is better, the RBI will have to consider many issues before deciding on the rate cut.
“Decision to lower the interest rates or not depends upon the overall liquidity in the economy and the expectations of the Reserve Bank regarding the behavioural inflation. Therefore apparently the latest decision (of not changing the benchmark lending rates) has been taken because they probably think that the inflation behaviour just not warrant a reduction in the interest rate,” Rangrajan said. He opined that as the banks are presently loaded with non-performing assets, any signal from the central bank will not yield desired affect until the position of the commercial banks improves.