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India seeing pick-up in growth, easing inflation: RBI chief

Rajan added “many” market participants were convinced that India could hit the RBI’s target of bringing down consumer inflation to 6 percent by January 2016.

Reserve Bank of India (RBI) Governor Raghuram Rajan said India is seeing a pick-up in economic growth although more could be done to support that on a sustainable basis, while noting inflation was also easing.

“The bottom line is we do seem to be picking up on growth and inflation is easing,” he told students at a business school in Hyderabad in southern India.

Rajan added “many” market participants were convinced that India could hit the RBI’s target of bringing down consumer inflation to 6 percent by January 2016.

He also said there is a broad consensus within the central bank about its restructuring process, a week after it had announced it was re-organising some of its departments.

The central bank will also allow more participation in the currency futures market, expanding the scope for investors to hedge, Rajan told students.

In addition, the central bank was in discussions with the government over the country’s monetary policy framework, calling the relationship between the two sides “cordial.” The central bank will provide more licences to asset reconstruction companies, noting that the country needs more specialists to put distressed assets “back on track.”

Talks included setting objectives for the RBI, he said, while adding these talks did not threaten the independence of the central bank and were instead issues being worked out between the two sides.

“The truth is the government and the Reserve Bank enjoy a free, frank and cordial relationship. We discuss many things and we try and do what is in the best interest of the country,” RBI Governor said.

Turning to markets, Rajan stressed the need to steer foreign investments into longer-dated debt. 

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