Inflation expectations are well anchored on the economy and this will bolster industrial and corporate growth further, said Rakesh Mohan, the deputy governor of Reserve Bank of India, on Friday. ?Domestic economy is now resilient to any kind of eventualities compared to the past.”
Addressing a gathering at the Ficci-IBA joint conference on ?Global Banking: Paradigm Shift?, Rakesh Mohan said that the Indian economy was now resilient and strong compared to what it was 10 or 15 years ago. It has absorbed shocks like high oil prices and changing monsoon conditions. However, the agricultural growth needs proper attention, he said.
It may be mentioned here that the inflation has come down to 3.52% for the week ended on September 1 as against 3.79% for the previous week. The financial sector has been witnessing several changes and policies are more attuned towards extending greater financial autonomy to the public sector banks, Rakesh Mohan said. The asset-quality of public sector banks too has improved and non-performing assets today are in tune with global standards.
On the interest rates, Rakesh Mohan said that interest cost for corporates had come down significantly over the years. Interestingly, the deputy governor observed that taxes in the ten to 15-year band were higher when corporate profits were lower and the reverse is the case today, where profits were higher and taxes at their record low. He could, however, offer no explanation for this trend.