HYDERABAD: Shutting down of the Nokia plant in Chennai altered the country’s Index of Industrial Production (IIP) data, according to Raghuram Rajan, Governor, Reserve Bank of India.
Factory output as measured by the IIP had slowed down to a 5-month low in August at 0.4 per cent due to contraction in manufacturing output besides others.
“While there had been some pick up in the industrial growth, the shutting down of Nokia plant in Chennai made a difference in the recent IIP data,” Rajan said.
But with inflation easing and current account deficit (CAD) toning down, economic growth was picking up and could touch 6-7 per cent next one or two years as against the 5.5 per cent project for the current fiscal.
“The bottomline is we do seem to be picking up on growth...CAD is smaller and inflation looks healthier, so we see a more sustainable growth going forward,” he said.
Interacting with the students of the Indian School of Business here on Thursday as part of his 2-day visit to the city, Rajan said, the CAD has been brought down considerably. Even as imports came down, gold sales picked up, just before the festive season and non-oil and non-gold exports have gone up by 6-7 per cent.
“Many market participants were convinced that India could hit the RBI’s target of bringing down consumer inflation to 6 per cent by January, 2016,” he added.
Referring to asset reconstruction companies, Rajan said RBI will provide more licences as the country needs more specialists to put distressed assets back on track.
The central bank was also in dialogue with the government regarding the monetary policy framework. “The truth is the government and the RBI enjoy a free, frank and cordial relationship. We discuss many things and we try and do what is in the best interest of the country,” Rajan said.
According to Rajan, a broad consensus has emerged within the central bank regarding its restructuring process, announced last week.
Meanwhile, with the government taking measures to improve access to finance, regulations and skilled labour for businesses to flourish, Rajan said, “The government was working in all these areas. I don’t see why we can’t overtime reach double digit given our level of development.”