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Situation of economy relatively good: Jalan

RBI Governor Bimal Jalan said on Monday that though there was pessimism now in the Indian economy because of a global slow-down, the overall economic situation continues to be "relatively good."

Jalan said the country's economic growth was expected to be in the range of 5.5-6 per cent in the current financial year, one of the highest rates in the world. India also has a relatively low inflation rate.

The Consumer Price Index was 3 per cent on an average, much better than the developing countries, he said at the inauguration of the fifth Asia-Pacific Risk and Insurance Association's Conference in Bangalore.

It was because of 'cautious policies' adopted by India that it could withstand the 'turbulence' witnessed in east Asia in 1997-98 and pressures of world economy, Jalan observed.

The strength of the Indian economy would stand it in good stead in case of any 'turbulence problem', he said.

Quoting international institutions' projections, Jalan said India was going to be one of the fastest growing countries in the next 20 years, and become the third largest economy in the world by 2025 after the US and China.

India had 'fundamental factors' in its favour. 'Time-zone' was to its advantage. With revolution in the technology sector, India was moving to high growth trajectory.

Skill-based industries had now become drivers of growth, he said.

Jalan said though economic reforms in the country were not moving at a pace one wanted, it was nevertheless moving cautiously and in the right direction, and expressed happiness that the direction of reforms was not a 'byproduct of some people's thinking but by consensus and Parliament'.

Referring to the country's foreign exchange situation, he said RBI was maintaining a high level of reserve to cover all liquidity at risk.

It's a deliberate policy to maintain reserves, he said, adding, India would not x problem.

There was also a thinking to have in the country a single regulator for financial system -- banking, stock markets and insurance, he said but told reporters later it might fructify after 20 years.

For the time being, he expressed the view that it is better to have a 'specialised agency' since India is a developing economy. Once the economy becomes stable, well-placed and there are multiple players, the idea of having a single regulator could be thought of, he said.

RBI was also debating whether its monitory functioning and regulatory functioning could be separated, he told the conference, jointly organised by the Indian Institute of Management Bangalore and Insurance Regulatory and Development Authority, New Delhi.

The conference on 'Creating a competitive edge in insurance for the emerging economy' is aimed at exchanging ideas, both theoretical and practical, on risk and insurance as well as related areas in the financial sector.

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