Mumbai, Jan 23: State Bank of India chairman O P Bhatt today said that a cut in interest rates by the US Federal Bank does not imply that India has to follow suit. ''A reduction in interest rate in the US does not necessarily mean that we also have to follow suit,'' Mr Bhatt said while talking to reporters on the sidelines of the ''Eighthth International Conference on Understandinng Social, Cultural and Political Context of Corporate Governance and sustainability in India'' held here today.
The system in the two countries is different, the SBI chairman pointed out while adding, ''If something is happening in the US, like the interest rate going up or down, it does not mean that we should move in the same direction in India.'' ''There are other factors operating in India, which are to be examined. And the authorities concerned are examnining them,'' Mr Bhatt said adding that based on the results, it will be decided whether rates are to be cut or remain as it is.
The US Federal Reserve on Jan 22 cut rates by 75 basis points to 3.5 per cent in an emergency move in view of the increasing signs of a recession in the economy.
When asked about the impact of the US recession on the Indian economy, Mr Bhatt said that the growth in India was taking place largely because of domestic factors and not owing to international factors.
''To a large scale, the growth has sustained on domestic factors. Moreover, in view of the recession, they (US) may outsource some business to India, and so there could be more business here,'' he said.
Stating that the market volatility had nothing to do with the fundamentals of the country's economy, the SBI chairman said that every sphere of the economy was doing well and had not been affected by the developments in the US.
''In fact, people are seeing this as a good opportunity to buy stocks. They are quite optimistic about it,'' he said.