Growth may slowdown to 8%: KV Kamath

KV Kamath, MD and CEO, ICICI Bank said that liquidity is comfortable and policy steps are needed to tame inflation. He added that inflation is purely driven by supply side factors. According to Kamath, economic growth could be seen in the range of 8-10%.

He said, "As a nation 60% of GDP comes from the services sector and that is going to keep us on a sustainable growth path, because the growth has been strong at more than 10%. So we will have inflation and I am sure policy measures will be taken to control inflation. I cannot comment on what those policy measures could be, but we will see growth happening because growth is today embedded into the way we have set our reform processes also. So growth may slowdown from 10% to around 8%; between 8-10%."

On the business of interest rates, he adds, "My policy always has been to look at market conditions before taking any step and when other banks were cutting rates, we did not cut rates. If I were to look at current context; we are in a very comfortable liquidity situation. Last year this time i.e. at the end of March, banks were paying 12.5% for a one yes deposit; today this year we have paid single digit money maybe 9.8-9.9% for one year money and that indicates what sort of liquidity we have, very comfortable liquidity situation in the country."  

According to HDFC Bank, the RBI action on the inflation spike should not be ruled out. They also believe that fiscal steps may pull down inlation by 50-60 bps, reports CNBC TV 18 quoting Newswire 18.