Reserve Bank of India (RBI) Deputy Governor Subir Gokarn on Tuesday said the moderation in bank credit growth so far this financial year was in line with the central bank’s expectation.
"It is a part of the demand-adjustment process that we had envisaged. We do not know the magnitude (of the recent numbers), but RBI had scaled down estimates for credit growth," Gokarn said, while talking to reporters on the sidelines of a banking seminar organised by the Indian Bank's Association and the Federation of Indian Chambers of Commerce and Industry.
RBI, in its first quarter policy review in July, had cut the non-food credit growth estimate for 2011-12 from 19 per cent to 18 per cent. The decline in credit growth partly reflects the moderation in economic growth and the effect of the series of policy rates rises that made credit costly for borrowers.
On the global turmoil, Gokarn said uncertainty had increased.
Growth estimates for the US have been cut and European numbers were looking weak. International economic growth would be less than what was estimated earlier, he said. On the effect of the global slowdown on India, he said exports may cool, but domestic drivers—public expenditure and domestic demand—would drive growth. RBI would monitor the situation, he said.
On inflation, Gokarn said if global commodity prices continued to remain flat or decline sharply, inflation in India would moderate from November-December.
Inflation, as measured by the wholesale price index, stood at 9.22 per cent in July. RBI had said inflation would remain at around nine till November.
