Mumbai, June 8 (IANS) High interest rate is not the main reason for the slowdown in economic growth that slumped to a nine-year low of 5.3 percent in the quarter ended March 31, Deputy Governor of Reserve Bank of India K.C. Chakrabarty said Friday.
"To say that growth is going down only because of interest rate is not correct," Chakrabarty said at a conference here adding there were many other reasons responsible for sluggish growth.
Chakrabarty said maintaining a balance between growth and inflation was major area of concern for the central bank.
He said inflation continued to be a concern and the central bank would formulate its policy taking into consideration both inflationary pressure and growth.
As per the data released by the Central Statistics Office, India's economic growth slumped to a nine-year low of 5.3 percent in the fourth quarter of fiscal 2011-12.
The country's gross domestic product expanded by 6.5 percent in 2011-12, which is even lower than the 6.7 percent level achieved during the global financial crisis of 2008-09.
Chakrabarty said RBI would cut interest rates only if there is definitive decline in inflation.
"If inflation comes down definitely we will cut rates," he said.
Chakrabarty said that infrastructure projects were not suffering in India because of lack of money and interest rates should not be blamed for growth slowdown in these key segments of the economy.
Chakrabarty pointed out that the RBI does not micro-manage interest rates and the banks should focus on the quality of their lending.