C. Rangarajan, Chairman, Prime Minister’s Economic Advisory Council, today asked rating agencies to take into account the many positive factors of the Indian economy when rating the country.
Delivering the keynote address at the two-day Business Line Investment Opportunities Fair that kicked off here, he outlined four points the rating agencies should consider.
He said India’s expected growth rate of 6.4 per cent this year is still quite high and only China, among BRICS countries, may grow at a higher rate of 8 per cent.
Second, he said while the current account deficit at 5 per cent of GDP is high, fiscal consolidation is happening. Though CAD is expected to ease to 4.7 per cent this year, ideally it should be 2.5 per cent. “We need to work on promoting exports of goods and services and reducing imports, particularly of oil, gold and coal.”
Third, he said, the Government is forging ahead with its reforms agenda, citing the example of the opening up of the retail sector to FDI. Finally, he said all efforts are on to clear obstacles to infrastructure projects.
Rangarajan also emphasised that though everyone talked about investments ‘not happening’, the problem really was investments not translating into immediate output boost.
On today’s monetary policy, he said the 25 basis point cut was “appropriate”. The WPI inflation had shown a tendency to decline, and non-food manufactured inflation was also within the comfort zone. Retail inflation was high, and required some contraction in demand.
“Taking all these factors into account a compromise was necessary and the RBI decided to reduce the policy rate by 25 basis points,” he said.
In his welcome address, D. Sampathkumar, Editor, Business Line , said the Fair aimed at providing a platform for the financial world and investors to interface.