New Delhi, Mar 12 (ANI): Reserve Bank Governor Raghuram Rajan today said the economy will witness volatility in its recovery as the IIP numbers have been disappointing.
Addressing the reporters after the RBI board meeting, which was addressed by Finance Minister Arun Jaitley, Rajan said, “We are in recovery. That’s broadly what we said before and by and large, we would stick to that. There is volatility in this recovery process.”
The RBI chief described the index of industrial production (IIP) numbers released yesterday as disappointing, which indicated that the economy is broadly moving in the direction of strengthening growth.
The industrial output for the third month in a row remained in the negative territory, contracting 1.5 per cent in January due to poor showing of manufacturing and capital goods sector.
The declining industrial output prompted India Inc to press for a rate cut by RBI, which is scheduled to announce its monetary policy on April fifth.
Talking about govt.’s plan of action to stick to the fiscal consolidation path and ease the monetary policy to boost growth, Rajan said the number of 3.5 per cent fiscal deficit target is a firm indication of government’s intent for fiscal consolidation.
He also said that the markets and RBI are comforted by the govt. action. “There are ideas that have been floated, for example, moving to a cyclically-adjusted fiscal deficit rather than a fiscal deficit that does not take into account ground condition. This is something that a number of countries also do. My guess is that all these issues will also be explored by the commission that is looking at this,” the governor said. (ANI)