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Indian growth not recessionary: RBI

The probability of a global recession is low, even though the US is growing slowly and Europe is experiencing negative growth, said RBI Governor D Subbarao on Friday.

"The probability of a global recession, I think, is low," he said at a CII event here, adding that even though India’s growth rate is falling, this cannot be termed as recessionary. "The US is not growing remarkably, but slowly. Europe is experiencing negative growth and Japan is also recovering," he added.

On the challenges currently facing the country, he said the RBI's job is to strike the right balance between growth and price sensitivity. "I am sensitive to 80 per cent of the people of the country who are affected by price rise. We will have to balance the concerns of the corporate leaders crying against interest rate hikes and the poor."

Subbarao said it is a legitimate concern that inflation did not come down appreciably despite hikes in the interest rate 13 times since March, 2010, but maintained that the rate of price rise would have been even higher had monetary tightening steps not been taken.

"It is a valid criticism. Had the RBI not acted, inflation rate now would have been 12 per cent or 13 per cent and not 9.7 per cent at the moment," he said.

On capital account convertibility of the rupee, he said it would not take place unless there was fiscal stability, more developed financial markets, stable growth and steady inflation

On the back of widespread fears that Europe’s sovereign debt crisis is pushing a global economic downturn, the Reserve Bank of India (RBI) on Friday said the probability of a worldwide recession is low.

"The projections are Europe will have a negative two percent growth in 2012. I am just putting a number but all the people are talking about European recession. America of course is not growing dramatically. Japan is also recovering. So the probability of global recession is I think low," Reserve Bank of India (RBI) Governor D. Subbarao said at an interactive session organized by the CII here.

"As far as India is concern, the growth rate fallen, but the characterization of this as a recession would be text book economics," he said