The probability of a global recession is low, even though the US is growing

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slowly and Europe is experiencing negative growth, RBI Governor D Subbarao said today.

"The probability of a global recession, I think, is low," he said at a CII event here, adding that even though India's growth rate is falling, this cannot be termed as recessionary.

"The US is not growing remarkably, but slowly. Europe is experiencing negative growth and Japan is also recovering," he added.

On the challenges currently facing the country, he said the RBI's job is to strike the right balance between growth and price sensitivity.

"I am sensitive to 80 per cent of the people of the country who are affected by price rise. We will have to balance the concerns of the corporate leaders crying against interest rate hikes and the poor."

Subbarao said it is a legitimate concern that inflation did not come down appreciably despite hikes in the interest rate 13 times since March, 2010, but maintained that the rate of price rise would have been even higher had monetary tightening steps not been taken.

"It is a valid criticism. Had the RBI not acted, inflation rate now would have been 12 per cent or 13 per cent and not 9.7 per cent at the moment," he said.

On capital account convertibility of the rupee, he said it would not take place unless there was fiscal stability, more developed financial markets, stable growth and steady inflation.