The Indian economy is shown signs of improvement, the governor of the Reserve Bank of India said on Thursday, adding that a pick up in rural demand would further improve economic growth.
“You may see rural demand coming back more strongly, and that would be a very tremedous bonus to the economy compared to we are,” Raghuram Rajan said at an industry event.
Rajan said separately that the devaluation of the Chinese yuanwas not something to be “concerned” about at current levels. He added, however, that global central banks depreciating currencies as a policy action was a worrisome trend.
On August 11, the Chinese central bank surprised markets by devaluing the yuan by nearly 2 percent.
The Reserve Bank of India continues to watch the progress of monsoon to assess the overall impact on inflation as well as global developments, Raghuram Rajan said on Thursday.
The comments come amid rising market expectations for a rate cut at the RBI’s next policy review on September 29 after consumer inflation eased to a record low in July.
Rajan, at an event organised by State Bank of India, added markets were reflecting the 75 basis points in rate cuts so far this year better than banks.
He also said access by companies to corporate debt was thus providing a misleading picture of overall credit growth in the country.
The RBI held rates at its last policy review on August 4, arguing in part that it wanted better signs that banks were passing on rate cuts.