Indian economy's growth story is intact, says RBI governor

Describing the current downturn a short-term phenomenon, RBI Governor D Subbarao on Saturday said Indian economy is mature enough to absorb 'shocks' and the country's growth story is intact.

"The structure of the economy has changed (since 1991). Our financial markets are more matured, more diverse and much deeper. They have the resilience to absorb shocks," he said while participating at a panel discussion on India's economic reforms and development here.

The Governor, who will be unveiling the annual credit policy on April 17, however, expressed concern over widening fiscal and current account deficits and talked about governance issues.

"There are serious concerns about macro-economic, about our policy and governance", he said.

The discussion, among others, was attended by Prime Minister Manmohan Singh who also acknowledged that economy was facing 'difficulties" but expressed hope that they will be overcome.

Subbarao further said although the key indicators like fiscal deficit and current account deficit were at the same level as in 1991 when the country had to take drastic actions to deal with the problem, but "implosion was not imminent in 2012".

He said, "India's growth story is intact ... current downturn is short-term phenomenon".

India's economic growth during 2011-12 slipped to three year low of 6.9 per cent, down from 8.4 per cent in the preceding two years. The government expects the GDP to expand by 7.6 per cent in the current fiscal.

Earlier in the day ,Subbarao met Singh and Finance Minister Pranab Mukherjee to discuss the country's macro-economic situation and is believed to have discussed the steps to be announced in annual credit policy to arrest declining growth.