Reddy: Looking beyond

Mumbai, May 19 (PTI): The Reserve Bank today said economy could grow beyond 7 per cent in 2004-05 on a backdrop of global recovery aiding exports even as it indicated a preference for stable interest rate regime to provide a conducive investment environment.

“What we say if you reach around 7 per cent, it amounts to a structural shift and what will take us to a higher level is the cyclical factor, which is surge in exports with global recovery,” RBI governor Y. V. Reddy said.

The RBI, in its annual policy for fiscal 2004-05, has pegged the gross domestic product (GDP) at 6.5-7 per cent. If acceleration in growth noticed during the third quarter of last fiscal is sustained, the real GDP growth in 2004-05 could well be higher at around 7 per cent, it had stated.

Reddy said growth of US economy estimated at 4 per cent would facilitate in global recovery and Indian exports.

The country’s GDP rate was realistic and sustainable with structural shift like favourable policy environment, he said.

Referring to interest rates, the RBI governor said, “Indian rates are absolutely in tune with the band of relevance and the domestic consideration indicate to stability.”

On inflation, Reddy said, “It is not optimistic. Though international factors like oil and commodity prices have grown, the domestic situation is comfortable with good monsoon, foodstocks and productivity gains.”