Global macro economic conditions to continue to be challenging: RBI, Deputy Governor The global economic conditions are likely to be challenging for some time to come, said Dr. Subir Gokaran, Deputy Governor RBI, during the interactive session organized by CII with the members of CII Southern Council, in Bangalore. The session was presided over by Mr. G.V Sanjay Reddy, Chairman, CII Southern Region, Mr. L. Krishna, Chairman, CII Karnataka State Council & Managing Director and Mr. Sujith Haridas, Regional Director, CII Southern Region. Speaking on this occasion, Dr. Gokaran mentioned that “The role of RBI in protecting the rupee's slide is limited despite some anti-market measures such as intervention since reducing the current account deficit.

Current account deficit is common among most of the emerging nations and these current account deficits are driven by global factors. Global conditions would continue to remain challenging for some time to come and it will have an impact in the Indian economy through oil prices, exports and capital flows” He also added that “Countries which encourage short time capital flows will see more depreciation in their currencies compared to countries which are not encouraging the short time capital flows. There for rupee will see more volatility in its rates. India is one such country that encourages short time capital flows. Commitment to a rule based fiscal deficit management is important as it gives predictability to the economy and the controlling subsidiaries are a positive step in this direction.

As subsidiaries being the primary contribution to the fiscal deficit. Long term relief can be provided by improving the fiscal position. The inflation rate has moderated from a 9% to 7%, primarily because the growth has slowed down. The first major challenge that we face would be the protein inflation, which would persist to reflect in our structure. The second challenge is high oil prices will continue to remain at the current rate. RBI actions to stabilize rupee could have sucked out the liquidity in the system, but the other reason for liquidity crisis is divergence in the deposit-credit rates of banks. Asset quality is another issue, partly due to the business cycle and the situation is likely to reverse with the change in the cycle.

Domestic growth inflation to balance but the challenge is there will be downside risk to growth and upside risk to growth that RBI will have to focus on. Financial and external pressures will continue to influence policy environment and RBI as a central bank cannot ignore them. At the same time there will be other risks, which cannot be ignored by RBI and we will have to be sensitive to this. However, the primary objective will be high growth and low inflation” Also speaking on this occasion, Mr. G V Sanjay Reddy said that “CII would advocate the growth in South India as South India has been a major driver in contributing to over 22 per cent of India’s GDP and 28 per cent of its employment. A high potential of growth could be expected in the manufacturing sector and Infrastructure in the south.

CII is working with State Governments on exclusive policies for the renewable energy sector. Also CII would set up 10 Skill Development Centers in Southern States with the support of Industry and Pan IIT Alumni Reach for India. In Karnataka, CII is conducting a Skill Gap Study, which would analyze the fast growing and emerging industry segments skilled manpower requirement. CII would give special focus this year on Art, Culture & Tourism and Women Empowerment initiatives. CII would launch the Festival of South India this year with an aim to celebrate the rich culture, heritage and history of South