The Hindu Business Line : `US slowdown to have minimal impact'

BANKERS ALL: The RBI Governor, Dr Y. V. Reddy, having an informal chat with (from left) Mr M. Balachandran, Bank of India's Chairman-cum-Managing Director; Ms Chanda Kochhar, ICICI Bank's Executive Director; Mr V.P. Shetty, IDBI Chairman; Mr K. Ramachandran, Andhra Bank Chairman-cum-Managing Director; Mr Kalyan Mukherjee, Andhra Bank Executive Director; and Mr K. Raghuraman, Punjab National Bank Executive Director, in Hyderabad on Saturday. Dr Reddy presented the Institute for Development and Research Banking Technology's Banking Technology awards. — Mohammed Yousuf

Hyderabad , Sept 3

The slowdown in the US economy is unlikely to have a significant impact on the Indian economy, according to the Reserve Bank of India (RBI) Governor, Dr Y. Venugopal Reddy.

He said on Saturday that though India was not totally insulated from the global economic developments, the US economy slowdown impact on India would be minimal compared with other emerging economies.

"Therefore, we expect that the growth targets we have indicated as well as the external set of performance, including exports, imports and current account deficit, will not be much different from what we have anticipated in the policy," the RBI Governor told reporters at the Institute for Development and Research in Banking Technology (IDRBT).

Perceptions

"It is not very clear that the US economy will slowdown considerably. But there are widespread perceptions that there could be some slowing down of the US economy. In such case, there will inevitably be some impact on the other economies, in particular on the emerging market economies," Dr Reddy said.

Responding to a query, he said it was the domestic factors that dominated India's monetary policies, though the global factors were increasingly becoming relevant. "However, there is no one-to-one correspondence between monetary policy actions of any specific country and the monetary policy measures of our country," he said.

Monitoring moves

Notwithstanding this, Dr Reddy said, RBI was carefully monitoring the moves and monetary policy measures of the Central Banks of developed countries such as US Fed, ECB and Japan so as to assess their possible impact on our country.

On the full capital account convertibility, he said the committee report had been placed in the public domain. Stating that the committee had recommended certain specific measures for 2006-07, Dr Reddy said: "Each of these recommendations have to be looked at carefully in the next few weeks because they relate to the year 2006-07. With appropriate consultations with the Government we may be in a position to take a considered view in the next couple of months."

Despite the fact that the position on monsoon conditions was not clear and also that there were certain global risks enumerated in the recent monetary policy, the RBI Governor said: "Our current assessment is that we will have a GDP growth of 7.5 per cent to eight per cent in the current year also as originally envisaged. We do not see any need to review the projections on GDP."