High interest rates are not responsible for slowing growth, KC Chakrabarty, deputy governor, Reserve Bank of India, (RBI) said on Friday.
"I don't think that interest rates are that high, or our policy rates are that high that should significantly affect growth," said Chakrabarty. "Growth is being affected for a variety of reasons. We are overplaying the interest rate aspect (for low growth). It may be one of the reasons."
He also said that there were other reasons responsible for the lower-than-expected growth. "I don't know how much growth sacrifice is due to lack of productivity, lack of efficiency, and how much is it due to inflation."
The Indian economy grew by a paltry 5.3% between January and March 2012, which was the lowest growth in about eight years.
Analysts and industrialists have blamed the RBI's stance on interest rate for the debacle.
The central bank has increased interest rates by 3.75% since March 2010 as inflation have reached uncomfortable levels. Inflation, however, has not come down drastically since then. Moreover, growth rate has slowed down from its peak of 9.6% in 2006.