Indian economy will recover quickly, says RBI Governor

New Delhi, Mar 27 (ANI): Reserve Bank of India (RBI) Governor Dr. Duvvuri Subbarao said that although it is uncertain as to when Indian economy will recover, when it does it will be sharper and quicker than other economies of the world.

"It is not clear when recovery will start, but when recovery starts around the world and in India, India's recovery will be sharper and swifter than elsewhere in the world," Dr. Subbarao said in the course of his address at a seminar hosted by the Confederation of Indian Industries (CII) here last evening.

He also dispelled fears of getting into a deep deflationary cycle.

"Our own view is that this is statistical. There is no fear of sustained deflation in India. I think our inflation dimension is quite healthy. There is no concern about our getting into a deep deflationary cycle," added Dr. Subbarao.ince October, the RBI has slashed its main lending rate by 400 basis points to shield the economy from the global financial crisis and also to shore up activity.

In this context, Dr. Subbarao said that 2009-10 would be a challenging period unless business confidence and investment are revived. Further, he said that cuts in policy rates needed to flow through to the broader economy.

India's wholesale price index rose by 0.27 per cent on March 14, below the previous week's annual rise of 0.44 per cent, government data showed on Thursday.

The Government has decided to tap markets for 2.4 trillion rupees of borrowings in the first half of 2009-10, two-thirds of its projected record borrowings for the full fiscal year that will commence on April 1.

Nonetheless, the government contends that India as Asia's third-biggest economy has grown by about seven per cent in the fiscal year that ends on March 31, its slowest pace in six years, after growing at rates of nine per cent or more in the last three years.

Gross borrowings for 2008-09 have more than doubled to 3.06 trillion rupees this year. (ANI)