He said the current account deficit had come down and some pick-up is seen in industrial growth. The bottomline is that growth seems to be picking up as inflation is easing, he said while addressing the students of Indian School of Business (ISB).
Rajan said many market participants were convinced that India could hit the RBIs target of bringing down consumer inflation to 6% by January 2016. We are expecting 5.5% this year; it may go up little more to 6% next year, he said.
He was in Hyderabad for the annual board meeting of the central bank. A release issued by the RBI said board reviewed the central banks functioning, the present economic situation, global and domestic challenges, and policy responses.
Rajan said RBI was in discussions with the government over the countrys monetary policy framework, calling the relationship between the two sides as cordial. He said the talks included setting objectives for the RBI and did not threaten the independence of the central bank and were instead issues being worked out between the two sides. The truth is that the government and the Reserve Bank (of India) enjoy a free, frank and cordial relationship. We discuss many things and we try to do what is in the best interest of the country, Rajan explained.
On asset reconstruction companies (ARCs), he said the RBI will provide more licences as the country needs more specialists to put distressed assets back on track. Rajan stressed the need to steer foreign investments into longer-dated debt.