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Jalan blames it on sloth
- RBi governor sees steady rates, benign inflation

Calcutta, May 15: If the nation’s money manager is not off the mark, economic milestones will be out of reach as long as sloth and poor productivity hold back growth.

Reserve Bank governor Bimal Jalan told members of city chambers that the rate of increase in gross domestic product — the value of all goods and services produced — will be trammelled by the abject acceptance of low output per head — something dyed-in-the-wool economists call productivity.

“We have to change our acceptance of lower productivity in the name of public good. Only then will we be able to achieve our targets of GDP growth,” said Jalan, whose institution sees a 6 per cent growth rate this fiscal.

Dwelling on the state of the economy, the RBI governor said he did not perceive the need for a cut in interest rates, which he said would stay soft, not softer. “We like to maintain a soft rate, not necessarily a softer rate. Since rates have come down significantly in the past three years, the scope for more reduction is limited. What we need is better risk management at this point.”

Hints that rates have bottomed out came against the backdrop of a resurgent inflation, but Jalan said after the RBI’s central board meeting that prices will cool in the second quarter of this fiscal. “Oil prices have come down substantially since the Iraq war and if the monsoon is good, that is 96 per cent of normal, there will be some relief,” he added.

At a meeting with chambers this evening, Jalan said the economy was more resilient to global shocks, despite inefficiencies.

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