Economic recovery remains fragile cautions Subbarao

Reserve Bank of India (RBI) governor, D Subbarao, addressing students and faculty of the Indian School of Business, in Hyderabad, on Friday, said that Indian economic recovery was still fragile and growth impulses needed to be nurtured.

He suggested going beyond the good growth numbers as sometimes figures may be due only to companies building inventories.

Subbarao was making a presentation on 'India and the Global Financial Crisis: Collateral Damage and Response'. He said it was necessary on the part of the government to return to fiscal consolidation and support growth drivers such as private investment and consumption.

Subbarao's deputy, Shymala Gopinath too had made a similar statement in Ahmedabad when while acknowledging an economic recovery she said it had to be assured.

Subbarao said had India increased rates in October, it would have attracted massive capital inflows that would have raised concerns as capital inflows in excess of current account deficit or over 2 per cent of GDP would be worrisome.

He said that as a matter of fact, the hot money that went into Brazil would change course toward India.