<p>“The conventional policy of interest rates ... now you do have to rethink on that,” Chief Economic Advisor Kaushik Basu told reporters.<br /><br />His comments come amid Indian corporates blaming the high interest rate regime for the decline in industrial output growth.<br /><br />“The dilemma that we are facing and the RBI is facing (is that) there are two battles we have to fight — inflation and growth. It is a really hard balancing act that the RBI has to do,” Basu said.<br /><br />The economic growth in the April-June period stood at 7.7 per cent, the lowest in six quarters. Driving at a correlation between the fiscal deficit target of 4.6 per cent of the GDP for 2011-12 and economic growth with inflation, he termed fiscal deficit as a “double edged sword”.</p>
<p>“The conventional policy of interest rates ... now you do have to rethink on that,” Chief Economic Advisor Kaushik Basu told reporters.<br /><br />His comments come amid Indian corporates blaming the high interest rate regime for the decline in industrial output growth.<br /><br />“The dilemma that we are facing and the RBI is facing (is that) there are two battles we have to fight — inflation and growth. It is a really hard balancing act that the RBI has to do,” Basu said.<br /><br />The economic growth in the April-June period stood at 7.7 per cent, the lowest in six quarters. Driving at a correlation between the fiscal deficit target of 4.6 per cent of the GDP for 2011-12 and economic growth with inflation, he termed fiscal deficit as a “double edged sword”.</p>