Alttag-Bimal Jalan, Governor of Reserve Bank of India 'Indian economy can withstand war shock' New Delhi: Reserve Bank of India (RBI) on February 12 expressed confidence that the Indian economy has the resilience to face any problems that might crop up in the event of a war in Iraq and said the soft interest bias would continue despite the rise in price level.

"War is war and nobody wants war. But our economy is such that it can handle any problem," RBI Governor Bimal Jalan said on the sidelines of an (Associated Chambers of Commerce and Industry) ASSOCHAM-NCAER (National Council of Applied Economic Research) seminar in New Delhi.

However, the Central bank would be watching the situation, Jalan said, when asked whether the volatile situation in Iraq could impact the macro parameters of India.

He said any revision in GDP (Gross Domestic Product) and agriculture growth would be considered only in the lean season policy in April. RBI projected that Indian economy would grow by 5-5.5 per cent this fiscal.

Jalan said the monetary policy stance of maintaining soft interest rate bias has not changed as of now. "It (stance) is the same as what we have said in the October credit policy," he added.

RBI had reduced bank rate by 0.25 per cent to a 29-year low of 6.25 per cent in the last busy season credit policy in October 2002.

Jalan also ruled out cut in repo rates, the rate at which government papers are repurchased.

Asked about the rise in yield of government papers, he said, "I have always said that market will take care of itself". The yield on benchmark 10-year gilt rose to 6.4 to 6.5 per cent the last fortnight.

Asked whether rise in inflation will force RBI to change its soft interest rate bias, Jalan said, "not yet".

PTI