Mumbai: Gross borrowing by the government next fiscal year may be higher, putting pressure on bond yields to climb, Reserve Bank of India (RBI) governor D. Subbarao said in a conference call.
RBI is aiming to support growth and tame inflation, and last week’s decision ordering lenders to set aside more cash as reserves will check inflation, he said.
Meanwhile, RBI deputy governor Subir Gokarn said the country’s inflation rate will continue to rise until March and will plateau.
World Bank pegs FY11 GDP growth at 7.5%
New Delhi: Indian economy is expected to grow at 7.5% and 8% in fiscal years 2010-11 and 2011-12, respectively, according to the World Bank’s latest Global Economic Prospects 2010.
The report, released in New Delhi on Monday, said India’s growth would benefit from a firming in external demand, particularly by the resumption of growth in high-income countries, which represent about two-third of India’s export market.
However, the report cautioned that as private consumption gains momentum following the marked deceleration during the crisis, India’s import volumes are likely to expand and are projected to outpace the recovery in exports, which may lead to deterioration in the current account balance. The report also cautioned against fiscal imbalance and higher interest rate payment obligations in the South Asian region, especially in India.
— Asit Ranjan Mishra