While Dr. D Subbarao, Governor of the Reserve Bank of India (RBI) adheres to his anti- inflation viewpoint, his statements largely contradicts his own stance.

Owing to his recent remarks that the credit growth is going at a fast pace, the country has huge overseas debts, experiencing high fiscal debts with highly unsustainable current account deficits; all of which straight away account to portend nothing but economic slowdown.

In order to fill the large existing space between imports and exports, the demand usually has to be diluted by increasing the cost, for both domestic and merchandized goods.

Correspondingly by dampening demand for automobile and housing, including fresh capital equipments for which the interest rates must be raised also to slow down credit growth by 4 per cent as marked by the RBI from the present 24 per cent.

Considering the fact that companies are always on the lookout for the best price to buy and in good quantity, they often try to get from overseas as they cannot borrow domestically. Fresh and new attempts to borrow from overseas must be ceased, especially when the overseas debts are too large. Lastly, the fiscal deficit is set to drop by a margin of 0.7 percent this year with no major bankable event unlike the last year’s spectrum auction, which fetched about 1.5 per cent GDP.

As a whole keeping in mind that this year’s GDP growth ended at 8.5 per cent, it would be impractical to envision a GDP growth of more than 8 per cent in the upcoming year.