Bangalore: A sharp contraction in India’s industrial output in March reinforces the slowdown trend in the country, a deputy central banker said on Friday.
The moderating inflation was a result of the growth slowdown, Subir Gokarn said.
‘Inflation key, but can’t ignore other forces’
The central bank remains focussed on fighting inflation, but other pressures cannot be ignored in the present situation, the deputy governor said.
India’s industrial output unexpectedly contracted 3.5% in March from a year earlier, government data showed on Friday.
Annual economic growth probably dropped from a near 8.5% to sub-7% in the 2011-12 fiscal year, which many consider to be the new trend growth rate for Asia’s third-largest economy.
‘RBI to continue to use tools to curb FX volatility’
The RBI deputy governor said the central bank will continue to use instruments within its ambit to curb volatility in the foreign exchange market.
The bank has been taking a slew of administrative measures in recent days to defend the battered currency with the latest being on Thursday when it asked exporters to sell half the foreign currency in their accounts and made it easier for the market to absorb large foreign exchange transactions.
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