Indian economy has seen some improvements but it would be too early to call it a turnaround, Chief Economic Advisor Raghuram Rajan said.

Speaking to reporters on Thursday, Mr. Rajan said that the index of industrial production, and the situation of credit and exports had improved, but he would not call it a recovery.

Mr. Rajan told reporters, "Periods of turnaround are periods of volatility. I won't go out and say recovery is here. Our job is to make sure that recovery is as strong as it can be."

He suggested that the current period should be used to build infrastructure and fill the existing gaps. He added that the steps taken recently by the government, such as the establishment of cabinet committee on investment, would assist the process.

In the Chief Economic Advisor's view, the country is saving too little. He admitted that the country can not do away with consumption, but stressed that there was a greater need to save more because more saving would lead to more investment and growth.

Mr. Rajan also stressed on the need to debate on foreign direct investment in the defence sector. He hinted that allowing FDI in defence would be beneficial to the nation's security.

Currently, according to the FDI circular, the defence industry is allowed to accept FDI of up to 26 per cent via the approval route. But, there are very strict norms attached to this limit.