DNA Money Edit: RBI guv hopeful on India's growth

Reserve Bank of India (RBI) governor Urjit Patel's conviction that the economic growth would pick up in the third and fourth quarters to above 7% has brought cheer to the country currently facing the recessionary pangs. What he strongly feels is all supported by RBI's projections based on high-frequency real economy indicators. In an interview, the governor said he has also started seeing the upturn. The Nikkei India Services PMI Business Activity Index rose more than 3% in September over August; the core sector saw a 4.9% rise in August. Even some high-frequency data such as automobile and two-wheeler sales suggested an upturn.

The central bank had reduced its full-year GDP forecast from 7.3% to 6.7% after growth slowed to a three-year low of 5.7% in the April-June quarter. Its estimates are in line with Organisation for Economic Cooperation and Development's most recent forecast for India's growth, but slightly lower than that of the Asian Development Bank's at 7%.

The slowdown had sparked some desperate shouts for lower interest rates. But with inflation boiling, the RBI left policy rates unchanged at a review by the monetary policy committee (MPC) last week. Surely, RBI won't lose sight of growth, but not at the cost of inflation.