Growth tempo could be hampered due to infrastructure constraints:RBI

Mumbai, Mar 18 (UNI) Reserve Bank of India (RBI) has expressed its concerns over the widening of fiscal trade deficit and infrastructural constraints to maintain the current growth momentum of the economy.

''The constraining influences on growth that deserve careful watch include the enlargement of trade deficit and infrastructural constraints'', said RBI in its report on currency and finance for the year released today.

For the year as a whole, while invisibles surplus finance a large part of the enlarged trade deficit, RBI said, the current account deficit is expected to remain within the acceptable limits that can contnue to be financed by normal capital flows.

In fact, the recovery in agriculture and resilience of the non-agriculture sectors during the year 2005-06 have firmly anchored the growth momentum of the economy at around 8 per cent annually.

Notwithstanding the downside risks emanating from erratic south-west monsoon conditions in the initial season period and persistent uncertainty on international oil prices front, the performance of indian economy remained impressive with a significant improvement in the growth-inflation trade off that resulted into increases in domestic productivity, driven by greater competition.

Further, the global risks to recovery of growth emanate from three areas such as unwinding of macroeconomic imbalances, the consequential currency adjustments and the future course of international oil prices. ''A heartening feature of the growth process in India, however, has been that domestic factors dominate the global factors'', it said.

In this context, RBI reiterated its policy stance by stating that the central bank would continue to support export and investment demand in the economy with supply of adequate credit to meet the genuine needs with due emphasis on quality and to consider responses as appropriate to evolving circumstances.

UNI GC KD AG1709