In his first press conference here, Dr Subbarao asserted that ''the engines of Growth in India is still on track and the recent moderation is only a cyclical down turn. The structural India growth story is still intact and credible.'' The Governor said ''For sustained economic growth, it is essential that inflation and inflation expectations be contained.
Our high growth over the past five years was accompanied by low and stable inflation, and financial stability.'' Dr Subbarao said a slow down in the economic growth after sustained nine percent economic growth should not be surprising as the intent of recent monetory tightening exrecise was to moderate demand.
Turning to financial sector reforms, Subbarao said the RBI would draw a roadmap that reponds to the country's immediate and medium term needs. ''Financial sector reforms were not an end in themselves. They have meaning and relevance only if they are anchored in real sector objectives,'' he added.
''While what the financial sector has achieved is impressive, the task ahead is formidable. The financial sector has to become more competitive, efficient and forward looking,'' he said, adding that the RBI was deeply conscious of the importance of financial sector reforms.
He said the Government and the RBI would bring out, shortly, a comprehensive report of the Committee on Financial Sector Assessment.
Asked whether monetary policy will be tightened further, Dr Subbarao said the Central Bank would monitor the situation loosely and continuously and take appropriate action, mindful of the implications of the monetary stance on the growth prospects.
''We will have to watch the impact of the measures already taken and also watch the drivers of demand, in particular which sectors are triggering the growth in demand,'' he added.