Jalan Allays Fears Of Possible Iraq War Shaking Economy

New Delhi, February 12: | Updated: Feb 13 2003, 05:30am hrs
Reserve Bank on Wednesday expressed confidence that the Indian economy had the resilience to face any problems that might crop up in the event of a war in Iraq and said the soft interest bias would continue despite the rise in price level.

War is war and nobody wants war. But our economy is such that it can handle any problem, RBI governor Bimal Jalan said on the sidelines of a Assocham-NCAER seminar here.

However, the central bank would be watching the situation, Mr Jalan said, when asked whether the volatile situation in Iraq could impact the macro parameters of India.

He said any revision in GDP and agriculture growth would be considered only in the lean season policy in April. RBI projected that Indian economy would grow by 5-5.5 per cent this fiscal.

Mr Jalan said the monetary policy stance of maintaining soft interest rate bias has not changed as of now. It (stance) is the same as what we have said in the October credit policy, he added.

RBI had reduced bank rate by 0.25 per cent to a 29-year low of 6.25 per cent in the last busy season credit policy in October 2002.

He also ruled out cut in repo rates, the rate at which government papers are repurchased.

Asked about the rise in yield of government papers, he said, I have always said that market will take care of itself. The yield on benchmark 10-year gilt rose to 6.4 to 6.5 per cent the last fortnight.