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India's central bank chief wants focus on sustainable growth

Published 18/11/2014, 15:06
India's central bank chief wants focus on sustainable growth

PORT LOUIS (Reuters) - India will focus on sustainable economic growth and developed economies should do the same, central bank Governor Raghuram Rajan said on Tuesday.

The Reserve Bank of India is under corporate and government pressure to bring down interest rates and boost economic growth.

"We have to make sure that across the world we focus on sensible, sustainable sources of growth," Rajan told reporters in Mauritius on Tuesday.

"Developing countries understand that very well ... It is something that Mauritius is trying to do, it is also something that India is trying to do. It is something that even the developed world has to realise it has to do."

India's economy has grown at less than 5 percent for the last two years. It picked up some momentum to grow 5.7 percent in the June quarter, but this is still way below the near double-digit growth last seen in 2008.

Finance Minister Arun Jaitley suggested on Monday the bank could consider a rate cut, noting slower inflation.

However, Rajan has been focussed on achieving 6 percent inflation by January 2016 and most analysts do not expect a cut when he makes his next policy annoucement on Dec. 2. Rajan has often emphasised that sustained economic growth requires inflation to fall and stay low.

India's consumer price inflation slowed to 5.52 percent in October on lower food and fuel prices, but is expected to inch up after December as comparisons become less striking.

© Reuters. The Reserve Bank of India (RBI) Governor Raghuram Rajan listens to a question during a news conference after the bi-monthly monetary policy review in Mumbai

"Lots of work to do to get India back on a strong growth path. The government has been putting together a series of reforms which I think cumulatively amount to big reforms. The central bank is putting together reforms. My sense is we will do what it takes," Rajan said.

(Reporting by Jean Paul Arouff, writing by Suvashree Dey Choudhury)

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