Trashing India Inc’s incessant criticism that RBI is not reducing interest rates, Governor Raghuram Rajan today accused them of being myopic and asserted that the central bank is for the “strongest possible growth”.
“I think there is a misconception in corporate India that the central bank is not concerned about growth,” Rajan said and underlined that the fundamental way to get sustainable growth is to have moderate inflation.
Addressing the customary post-policy press briefing, Rajan said, “We are not talking about growth for this quarter. We are talking about years of sustainable growth. To get that you need to fight inflation, beat it and then you can get sustainable growth.”
Asserting that RBI is not against growth but wants the strongest possible growth, Rajan pointed to the incessant fight between the savers and producers and said, “The big fight between savers and producers has been that savers are seeing high inflation and so can’t save, whereas producers are seeing low inflation and say interest rate are so high and how can they invest.
“How do you bring these two together? By bringing inflation down. Otherwise, we are going to have this high inflation and low growth scenario again and again. And so, I think it is very shortsighted when people comment that you (RBI) are not helping growth this quarter,” the Governor said in combative tone.
India Inc and many political leaders have long been demanding a rate cut as growth has been trending down. The GDP grew at 5.3 per cent in the second quarter of this fiscal as against 5.7 per cent in the first quarter.
Rajan said RBI is also in the process of creating a framework which will make the sustainable growth possible.
“I would say bare with us (for some more time) and hopefully if we can reach there and stay there. We will produce many years of strong growth for corporate India,” Rajan said, adding that RBI has a projection for a steady pickup in growth going forward.