Rangarajan Says Too Early to Make Pessimistic View on Rural Economy

Bengaluru: Reacting to global giant Moody's comments that Indian rural economy will remain subdued in 2015-16, former Reserve Bank of India governor C Rangarajan on Tuesday said it is too early to make a pessimistic view and that he did not share the pessimism of the ratings agency.

"It is too early to take a pessimistic view on India's performance in agriculture ... I don't share the pessimism of Moody's," Mr Rangaranjan told PTI after delivering an A M Khusro Memorial lecture - Indian Economy: Immediate Concerns and Medium Term Challenges - here.

Moody's said it expects India's weakened rural economy to remain subdued through the fiscal year ending March 2016, particularly if the risk of below-average monsoon rainfall materializes.

"The first month of the monsoon has been good and in fact the country had surplus," Mr Rangarajan said.

He said while he expected that the agricultural growth rate may not be strong, but it would certainly be as good if not better than the last year.

"While I expect that the agricultural growth rate may not be strong, but it would certainly be as good if not better than the last year," Mr Rangarajan said.

As far as the overall growth rate is concerned, Mr Rangarajan said he still would put the estimate between 7.5 per cent and eight per cent, and would be a shade better than what it was last year.

"As far as the overall growth rate is concerned, I still would put the estimate between 7.5 per cent and 8 per cent, and would be a shade better than what it was last year," he said.

The results of the latest polls conducted by Moody's has shown "some disappointment...with regard to the pace of reform under the administration of Prime Minister Narendra Modi, and increasing concerns about the risk of policy stagnation".

"Specifically, almost half of the poll respondents identified sluggish reform momentum as the greatest risk to India's macroeconomic story."