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Short-, medium-term growth outlook mixed: Subbarao

Published on Thu, May 14, 2009 at 17:45 | Source : CNBC-TV18

Updated at Fri, May 15, 2009 at 13:52

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Dr Duvvuri Subbarai, Governor of the Reserve Bank of India, said the country's short- and medium-term growth outlook was mixed. "The objective is to restore the economy to a high-growth path," he said, adding that the FY10 GDP growth was seen at 6%.

Rural consumption, he said, was holding up. "The liquidity in the banking system is ample," he added.

Subbarao also said India's turnaround was seen much sharper once the global economy recovers. He however added that unwinding the expansionary policy undertaken by the RBI would be a challenge once the financial crisis is over.

Here is the verbatim transcript of Duvvuri Subbarao's address at a press conference. Also watch the accompanying video.

The Reserve Bank of India's action comprised monetary accommodation and countercyclical regulatory measures. The policy response of the RBI has helped in keeping our financial markets functioning in a normal manner and in arresting growth modulation. The liquidity in the system remains ample.

The most frequently asked question today is whether the worst is behind us. I wish I could precisely say when the economy would start to recover. The pace of decline in certain areas has however started to moderate with some sectors showing tentative signs of recovery.

There are insipient signs of revival of business confidence but these signs may have to be more widespread across indicators and more durable to draw any clear inference of the timing and pace of recovery. The balance of assessment at this stage continues to support our earlier assessment of real GDP growth of about 6% for the current year.

Once the crisis is behind us, managing inflationary expectations and advising the current expansionary policies will be our task and our challenge. Once the global economy begins to recover, India's turnaround will be sharper and swifter backed by our strong fundamentals and the untapped growth potential.

Our overarching policy objective is to restore the economy to a high growth path consistent with price and financial stability.