Rain shortfall cause for worry: D Subbarao

THIRUVANNTHAPURAM: Deficiency of rainfall is a cause for worry as it might put pressure on some commodities, RBI Governor D Subbarao said here on Monday.

Rain shortfall in parts of Karnataka, interior Gujarat and Rajasthan could put pressure on oil seeds and pluses, Subbarao said while delivering a lecture on 'India in a Globalising World: Some Policy Dilemmas', organised by the State Planning Board here.

There is a 20 per cent deficiency of rainfall in the country and as far as Kerala was concerned it is 40 per cent, he pointed out. Rejecting the criticism that RBI was not able to control inflation, he said through tightening monetary policy it succeeded in bring down the inflation rate from 11 per cent to the present level of 7.3 per cent.

However, he said the 7.3 per cent inflation level was above tolerance level and high. The new inflation rate would come out tomorrow, he added.

Various steps were also taken to strengthen the Indian currency against dollars, he said. "We sold dollars to strength the currency and putting curbs on speculation on exchange rate, he said.

On the 6.5 per cent growth rate which he said was the lowest the country recorded in the last nine years. There were many external and domestic factors responsible for it, he added.

The 6.5 per growth was not good for the country, he said, adding, "we have to grow faster". Economic reform policies have to be implemented with sincerity and urgency of purpose to put the country into the path of high growth trajectory, he further said.

Country has to grow at 10 per cent rate for the next 15 years, he said. Country could achieve this by supporting investment sentiments, removing infrastructure bottlenecks and through fiscal consolidation.

The economic recession in European countries had also its effect on India, he said. But the present economic crisis would not be the 'type' the country faced in 1991. "India has changed since 1991 and we are not going to face a similar crisis now," he said. He, however, said policy space to respond to the present crisis was less compared to the situation in 1991.

Giving various reasons for the optimism, he said service sector has grown by 65 per cent, foreign exchange reserve was to a tune of 285 billion dollars and exchange rate was monitored now unlike in 1991.

State Chief Minister Oommen Chandy inaugurated the meeting which was attended by K M Chandrasekhar, the State Planning Board Vice-Chairman.