Investment growth needs to pick up: Raghuram Rajan

Says no point in cutting interest rates with inflation still high

The Reserve Bank of India (RBI) Governor Raghuram Rajan said India's macroeconomic indicators are improving and inflation has been coming down consistent with the central bank's forecast, but Asia's third-largest economy needs investment growth to pick up.

Rajan, however, said Friday's industrial output and inflation data suggested that recovery was "uneven."

Output from mines, utilities and factories grew by a much slower-than-expected 0.5% year-on-year, government data showed on Friday, down from June's revised 3.9% rise.
 

Rajan said inflation was still high and there was no point in cutting interest rates to see inflation pick up again.

Retail inflation, which the RBI tracks for setting lending rates, edged down marginally to 7.8% in August from 7.96% a month earlier.


 

Rajan also said that there was a need to change the management appointment process in public sector banks to make it more transparent.