Dismissing fears of the country heading towards a 1991-type of economic crisis,RBI Governor D Subbarao today said India is unlikely to face a similar balance of payments situation even as the large current account deficit (CAD) is a matter of concern.
…its unlikely that we will have a crisis of 1991-type simply because we have moved on. India is a much more liberalised economy,we integrated into the world,our exchange rate is largely market-determined,our financial markets are deeper,Subbarao said in an address,organised by the Federation of Karnataka Chambers of Commerce and Industry.
We are unlikely to have a balance of payments crisis like the one we had in 1991,he noted,adding large current account deficit and fiscal deficit are no doubt concerns.
CAD touched a record high of 6.7 per cent of the GDP in third quarter ended December 2012.
Subbarao noted Indias economic reforms in 1991 were triggered by balance of payment crisis and thereafter for 15-17 years the external sector had remained robust,though it had problems on the fiscal and inflation fronts.
In the last three years,there have been strains on the external sector which had accentuated,he said. He termed the estimated five per cent GDP growth of 2012-13 as very disconcerting and uncomfortable. The RBI would come out with growth estimates for 2013-14 in its annual policy on May 3.
Shift in food habit in rural areas fuelling inflation
Impressive rise in rural incomes is fuelling food inflation as peoples dietary habits are changing and increasing consumption,RBI Governor D Subbarao said today. Now we have evidence. Over the last five years,rural wages have grown by 20 per cent every year which RBI Governor termed as a remarkable success story.