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April 19, 2001
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RBI bets on IT despite slowdown

NetScribes / Abhijit Basu

Even as the entire country fears the worst from the US slowdown, the Reserve Bank of India thinks that the situation is not really as bad.

"All expert opinion and data available with RBI point to a buoyant growth in the services and value-added sectors in the current year. We believe that even if profits go down, value addition is expected to have a positive impact on the services sector. This is even after facing the US meltdown. We believe business should flow this way," RBI governor Bimal Jalan declared just after unveiling the credit policy for 2001-02.

Statistics by the Central Statistical Organisation forecast GDP growth at 6 per cent for 2000-01 as against 6.4 and 6.6 per cent in the previous two years.

And while growth in the agricultural and industrial sectors is expected to be lower, the RBI believes that "the continued good performance of the services sector, particularly of the information technology-related services", will see the GDP growth touch 6 per cent.

"While there is still considerable uncertainty, it is widely expected that the world GDP growth would be substantially lower in 2001 compared with a high growth of about 5.0 per cent in the previous year, primarily due to the slowdown in the US economy. However, a favourable factor this year is that the international inflationary environment is reasonably benign," the central bank said in its monetary and credit policy.

Monetary & Credit Policy 2001-2002 (First Half)


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