The economy is "truly" in a recovery mode and RBI will continue with its accommodative policy to boost growth within the space available under government's inflation target, Governor Raghuram Rajan said today even as he declined to take credit for the uptick.
"What we have is an economy which is well and truly in recovery, but with areas of weakness. Hopefully, as we go forward, some of the areas of weakness will turn around," Rajan told reporters after the 5th bi-monthly monetary policy review in the 2015-16 fiscal.
The Central Statistical Office yesterday said the economy clipped at 7.4 per cent in the September quarter -- 7.2 per cent in the first half of the current financial year. The government has projected 7.6-7.8 per cent growth this fiscal while the RBI has pegged it down at 7.4 per cent today with a negative bias.
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Rajan, whose anti-inflation stance had last year earned him flak from pro-growth advocates, declined to take any credit for the economic growth though it has been nearly a year since the central bank shifted its hawkish stance.
A variety of factors, including a "feel good" environment created by the government and the surge in public investments, have helped the economy turnaround, he said.
"What causes growth? It's a mix of factors. I would be far from claiming credit for the monetary policy," he said.
When reminded of the flak he received, Rajan retorted saying "that doesn't mean I should take credit when growth takes place".
"We are all working together to ensure that growth takes place, and it is in our collective interest; and I will emphasise again, the RBI is not against growth. We need sustainable growth and we will ensure maximum sustainable growth we can get," he said, adding that the inflation limit set by the government defines what is sustainable.
Rajan asserted that the central bank under his guidance continues to be "accommodative" in its stance, but will be vigilant to pick up signs of challenges on inflation.
Earlier in the day, RBI adopted status quo on policy rate, after having cut it by a surprise 0.50 per cent in the last review on September 29.
On inflation, Rajan said he was hopeful that inflation
would fall below 6 per cent, a level that was breached in the previous month, while adding that the data should be awaited for August -- the last full month of his tenure.
Asked if he had intolerance within BJP and Sangh Pariwar in mind when he made the controversial speech at IIT-Delhi in October last year, Rajan said, "No. I had the environment certainly at the back of mind where there was a discussion certainly about tolerance."
"It was a topical issue," he said. "But a week after I gave the speech, I met a Cabinet minister who said I have been saying exactly these things. So it wasn't as if it was 'anti government'. Which government is going to preach intolerance?" he said.
Rajan appeared to blame the social media for taking away from speeches "what it wants to hear."
"I think the way the speeches are sometimes interpreted, when you read the speeches it comes out the way the criticism appears," he said.
Stating that the reporting of the speech was that it was an anti-government speech about intolerance, he said, "The actual content of the speech is a plea for tolerance because it is in the best tradition of India and continuation of tradition into the future. It was not about saying we have a intolerant environment. It was a plea for continuing our tradition."
He however did not agree with the question about his speech being misquoted and said communication is a continuous process and often ideas have to be repeated and re-emphasised.
Rajan said he did not talk about "rising tide of intolerance".
"I talked about need for tolerance going forward if you were to have an economy based on ideas, based on engagement, based on dialogues and that was in a speech at the IIT Delhi convocation.
"When you are talking to young minds, and you are trying to tell them about a future we want to aspire to, you draw on a history of tolerance in the past and you tell them this is where we should be and this is where we should be going," he said.
The Governor said in his opinion that speech was not "stepping out of bounds."
"I think that is the legitimate duty, in fact the moral responsibility, of the public figure who has the attention of young minds, to tell them this is what good citizenship is about, this is where we should be going.
"I have absolutely no regrets about saying it. If people think that was a criticism of the government, I think they should revisit what is in that speech and what any government would say about what its moral duty is," he said.
Stating that in such lectures one talks about topical issues, he said, "but you engage in a way which is apolitical, which is about the best interest in our democracy and I think that is absolutely legitimate.
On his post-retirement plans, Rajan said he is going to
take a break from public speaking for some time as it was important for his successor Urjit Patel at RBI to get some space.
"So when I move out, I will stay out for a little while," he said.
"I actually want to learn a little more about certain aspects of the country and travel around a little bit... I will pop back in. I will work with informal structure... This is an exciting, vibrant, large, immensely interesting country and there is absolutely no reason why I should stay out."
On advise to his successor, he said Patel is a grown-up man and knows how to do things and has also been handling some of the relationships with the government for some time.
"And I have confidence. He will manage it going forward. So I have no advice that will be of any use to him. I have briefed on all the issues we are dealing with, but he has his own mind," he said.
