RBI chief Raghuram Rajan said reforms are the only way for sustainable growth

Addressing bankers and industrialists at an event, Reserve Bank of India Governor Raghuram Rajan on Friday said India appears an island of calm amid turmoil in other countries. He stressed upon the need for implementation of reforms for sustainable growth in Indian economy.India appears to be an island of calm in an ocean of turmoil. We have to expand the sustainable growth potential. That means continuing to implement reforms that government and regulators have announced. That's the only way to get sustainable growth potential up.In this difficult (global) environment, growth has to be obtained in right way. It is possible to grow too with substantial stimulus as we did in 2010 and 2011 only to pay the price of higher deficit, higher inflation and lower growth in 2013 and 2014. Our own experience suggests that we have to be careful. Of course, India is not in the same situation today. Much has changed since those days. With the world being an inhospitable place, we have work hard to strengthen our current recovery and put it on more sustainable footing.Industrial economies are still struggling with a few exceptions. If we look around the world today, it would be fair to say it does not paint a pretty picture. Uncertainty about growth in US and as well as the world is what propelled the Fed to stay on hold yesterday. Our fellow BRICS have all got big problems.We have to keep inflation low not just today but also in the future. Monetary policy will accommodate to the extent there is room.While we understand the difficulties industry has and will work as hard as we can on improving the business environment. India must resist special interest pleas for targeted stimulus, additional tax breaks and protections, subventions and subsidies - all of which have historically rendered industry uncompetitive, government over-extended and the country incapable of regaining its rightful position.We have to create business environment but then business has to run on its own footing because it creates effective business.A speedy bankruptcy code is needed to give creditors more ability to handle distress. There is need to clean up the banking system of distressed assets so that it can fund growth again.Brazil offers a salutary lesson. Only a few years the world was applauding its strong growth, its thriving democracy and the enormous strides it was making in inequality. It grew 7.6 per cent in 2010 and had discovered huge undersea oil reserves. This year it is expected to shrink by 3 per cent.Paradoxically it may seem, Brazil tried to grow too much. The 7.6 per cent growth came on the back of substantial stimulus after the global financial crisis. And an attempt to keep growth at that high level, the New York Times says the central bank was pressed to reduce interest rates fueling a credit spree that overburdened customers only now struggling to repay.