Governor Rajan says RBI to remain focused on bringing down inflation

Mumbai, Aug.29 : Reserve Bank of India Governor Raghuram Rajan released the central bank’s annual report for the year 2014-15 on Friday, and said that the RBI would continue to remain focused on looking for ways to reduce inflation.

Rajan said that despite immense efforts by the government and the RBI, the stability of Indian economy was still a work in progress.

He said, economic growth is still below levels that India is capable of and that inflation is still on the higher side and the willingness of banks to cut base rates is muted.

The report says that uncertainty in the progress and distribution of monsoon continues to be a risk for both growth as well as the inflation outlook.

The RBI has said that it is closely monitoring the overall disinflation strategy that requires inflation to be brought down to five per cent by January 2017.

Rajan said the focus is on getting the underlying real projects back on track; while also keeping a check on the progress of current projects.

He said the RBI has created a database of loans of over 50 million and advised banks and NBFCs to report regularly on the status of the loans.

He also that the RBI has welcomed the government’s decision to add to the recapitalisation fund for banks as it will help in cleaning up balance sheets and generating healthy growth.

The RBI report has said that with a surplus expected on trade in services from software exports and travel earnings, the current account deficit for the year as a whole should be contained below 1.5 per cent of GDP.