GDP growth slowdown to 7.8% on expected lines: Bankers

Bankers said a slowdown in GDP growth to 7.8% in FY 11's last quarter was on expected lines as the RBI & the IMF had already hinted at a dip in growth.

By PTI | Updated: May 31, 2011, 02.15 PM IST

MUMBAI: Bankers on Tuesday said a slowdown in GDP growth to 7.8 per cent in FY 11's last quarter was on expected lines as the Reserve Bank and international agencies like the IMF had already hinted at a dip in growth.

"(It) is not something totally unexpected. It was clear many of RBI's reports and international financial institutions had been hinting that the growth may not be same as last year," Central Bank of India's Chairman and Managing Director, S Sridhar, told reporters here.

Looking at the possible slowdown in growth, banks have already taken the right steps, he said, adding that the RBI has also downsized the growth expectations both in advances and deposits in its annual monetary policy.

With data released today confirming the fears of slowdown in growth, lenders and other agencies will have to take a "more nuanced" response, he said.

Data released today said GDP grew 7.8 per cent in the January-March quarter versus 9.3 per cent for the same period year ago while the total GDP growth for the entire FY 11 was a healthy 8.5 per cent.

Union Bank of India Chairman and Managing Director M V Nair said one should not read too much into the 7.8 per cent number as it is only a couple of notches below the RBI's forecast of 8 per cent.

"A few points here and there should not matter much," he said, conceding that the numbers are less than what he had expected.

Both Sridhar and Nair drew attention to the RBI's stated policy of targeting the rising inflation number even if it results in the growth slowing down in the near term.

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