Chief economic adviser Raghuram Rajan, speaking ahead of the December 18 credit policy review meeting of the Reserve Bank of India, said on Thursday that India's economic growth was stabilising, but more efforts were needed to strengthen the recovery process.
He also said that the sudden spurt in factory output, which rose 8.2% year-on-year in October, should not be an influencing factor to slacken efforts. "We should not be overtly influenced by one number because issues of base effect are there… We should take it as part of pattern."
He was speaking a day after finance minister P Chidambaram said that the growth in the index of industrial production reflected the emergence of "green shoots" in the economy even as retail price inflation rose close to double-digits, raising questions on whether the RBI would consider slashing interest rates next week.
Domestic factors would be key to reviving growth, Rajan said, adding the uncertainty in the US and euro zone would continue to be an influencing factor. "India will be influenced by growth constraints in Europe," he said.