Mumbai, Nov 22: Bimal Jalan, new governor of the Reserve Bank of India (RBI), has expressed concern over the slowdown in the industrial growth. "The industrial slowdown is a matter of concern. Having been present at serveral review meetings on various sectors like power, telecom, roads as the member - secretary Planning Commission, what I feel is that the system as a whole -- and not the Reserve Bank alone -- should facilitate investments in the infrastructure sector," Jalan told reporters at a meet-the-press function immediately after taking over as the RBI governor on Saturday. The RBI, along with other financial institutions and banks, will facilitate financial intermediation process in the infrastructure sector, Jalan said.

Latest data showed that industrial production growth in the first five months of the current fiscal grew 4.7 per cent year-on-year, decelerating from the 11.2 per cent growth seen in the same period last year. The central bank's monetary policy will continue to focus on the twin objectives of price stability and growth, Jalan said.

"There is no trade-off between price stability and growth," he said. According to the new RBI governor, an inflation rate mandated by Parliament will be difficult to enforce in India because of the importance of agricultural output in the national income.

"The situation in India is different from the industrial countries," he said.

Outlining his priorities, Jalan said that his first priority is "to try and in some way live up to the reputation and excellence of my predecessor". Chakravarthy Rangarajan stepped down on Friday after guiding the country's central bank through the most critical phase of financial sector reforms between 1992 and 1997.

Jalan also committed to improve the functioning of the central bank, particularly in regard to currency management. On the central bank's monetary policy, he said: "I think we are on the right track." "So far as the credit policy is concerned, I have nothing new in mind. The credit policy was extremely well received. My task will be to continue with it," he said.

On the volatility in the forex market and the fast depreciating rupee, Jalan refused to comment. "I am not going to say anthing at all. I don't want to do any loud thinking. The RBI will make statements whenever it is necessary," he said.

He was, however, categorical that India will not go the South Asian way. "The economic fundamentals are extremely strong, current account deficit is very small, inflation is low and forex reserves are very high," he said. Inflation, measured by the wholesale price index, fell to 3.23 per cent year-on-year in the week ending November 1, down from 6.72 per cent a year earlier. Foreign exchange reserves stood at $29.76 billion on November 13, compared with $23.79 a year earlier.

The current account deficit, according to Rangarajan, would be in the order of 1.4 per cent of gross domestic product, up from one per cent in 1996-97.On curbing government spending, Jalan said that "certain amount of technical work has been done on the issue. I should expect a public debate on this. The matter has been discussed in Parliament. This is not an issue for RBI. But we will provide whatever technical help is required."

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.