Reserve Bank governor Duvvuri Subbarao has projected a “steeper moderation” in economic growth in 2009-10. Speaking at the CII annual session in New Delhi, he pointed out that the challenge for India was not to control the financial sector, as the US was doing to cure its ailing banks, but to arrest the moderation in growth.
“Growth moderation will be steeper than we had earlier thought and I believe 2009-10 is going to be more challenging,” said D Subbarao, governor, RBI.
He said that 2008-09 was better placed as it had two good quarters that had not witnessed the impact of the global crisis and also the fresh corporate investments is being deferred under the current environment in 2009-10 which would make it more challenging.
Subbarao said recovery will start after stability sets in, but show a robust rebound.
“India’s recovery would be sharper and swifter than elsewhere in the world as all the key drivers of growth in the Indian economy are still intact.”
The governor said closer financial integration of India with the world caused it to suffer the impact of the crisis.
The current and capital flows as a percentage of GDP which stood at 46.8 per cent in 1997-98, had risen to 117.4 per cent in 2007-08, he said.
“India is much more integrated with the world than we tend to believe,” he said.