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Jalan foresees 6% GDP growth this fiscal

Optimistic of a 6 per cent growth, Reserve Bank Governor Bimal Jalan said on Thursday that the bank rate would not be directly affected by any cut in interest rate on small savings, but was silent on reports of a possible rate cut in the near future.

Even if government decides to reduce small savings rates, Jalan said there would be no "direct impact" on bank rate.

"I don't want to make any comment," he said when asked whether RBI would reduce rates following the rate cut by US central bank.

Allaying fears that the Gujarat earthquake would drastically bring down the economic growth rate, Jalan said it would be around six per cent this fiscal and the prospects of a higher growth of 7-8 per cent in the medium term were "excellent".

"The GDP growth, I think, we are expecting about 6 per cent or so," Jalan said when asked about the possible impact of Gujarat earthquake on the economic growth this year.

Speaking at the FICCI seminar on insurance, he said despite the downturns and fluctuations, India has achieved an average growth of six per cent in the last 10 years.

"Leaving aside the cyclical fluctuations, the medium-term prospect of growth is excellent ... If the economy grows at about 7-8 per cent, then there are tremendous opportunities for the financial sector. India will be a thriving and prosperous market," the RBI governor told the participating insurers.

He said the country had managed the external sector well and has become resilient with exports growing at over 20 per cent.

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