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Rajan sees pickup in Indian economy

By Religare

Raghuram Rajan, the Governor of the Reserve Bank of India (RBI) has given a positive prognosis on the health of Asia's third biggest economy which is showing signs of picking up pace led by a revival of rural demand.

"You may see rural demand coming back more strongly, and that would be a very tremendous bonus to the economy compared to we are," the RBI chief said at an industry event, as reported by media news agency Reuters.


Recent economic indicators back up Rajan's claims of a strengthening India economic growth story. While industrial output growth quickened to 3.8 per cent in June 2015, year on year from 2.5 per cent in May 2015, a combined gauge of manufacturing & services rebounded into expansion terrain in July, while car sales soared 17 per cent last month.

However, exports remain mired in the red, contracting for the eighth month on the trot in July amidst a worsening global slowdown with the devaluation of the Yuan threatening on the pain for the country's exporters. However, Rajan didn't seem to be overly concerned over the Yuan devaluation shock which has pushed the rupee to a two-year low against the dollar amidst a flight from emerging market assets.

The RBI is closely watching the progress of the Monsoon and its impact on inflation ahead of its next policy meet on September 29 as hopes build up for another interest rate cut after consumer inflation hit a record low in July.

Story first published: Thursday, August 20, 2015, 23:00 [IST]
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