Stating Indian economic recovery is still uneven, RBI governor Raghuram Rajan has exuded optimism that the country will be “solidly” in the 5 per cent growth bracket during the course of this fiscal and accelerate further in the next financial year.
The RBI governor also said he is not “overly” worried about any interest rate hike by the Federal Reserve, saying the country had enough foreign exchange reserves.
“It is still an uneven (economic ) recovery, so my guess is that this quarter may be a little weaker than the previous quarter but I think over the course of this year, we will be solidly in the five per cent growth range and by next year we should be solidly in the six per cent growth range,” he said.
Rajan was speaking at the Institute of International Finance in Washington on Saturday.
He also said there was no need for “grand-sounding announcements” and that the India needed to “fix the plumbing,” including correcting problems in coal and gas sectors to accelerate improve recovery and get the Indian economy back on track.
Rajan said that while India has to do its basic homework, the “good news” is that there are “lots of low-hanging fruit and we got to pluck them“.
“Of course the big question is why we did not do it before but I think there is an environment and there is a willingness at this point to do what it takes.
“What it means, I would caution people on, is not at this point grand-sounding announcements because that is not what we really need.
“We need to fix the plumbing.
“We need to do the basic stuff which will get the economy back on track,” he said when asked how India will meet the high expectations that have been set by the new Narendra Modi government to revive economic growth.
In a lighter vein, Rajan said the expectations need to be toned down.
He however added that on the real side focus should be on getting the projects that are stalled going again, fixing problem in coals and gas, “which are not the stuff of headlines but are quite important” as well as getting businesses and government departments to make payments on time.
Rajan said beyond 2016, the Indian economy will grow depending on what the country does over these couple of years.