Govt's easy stance exit to be careful - RBI deputy

MUMBAI (Reuters) - India would have to carefully exit from its more than a year long accommodative monetary stance, though economic recovery is on course, one of the Reserve Bank's deputy governors said on Tuesday.

"Exit is clearly going to have to be done very strategically, very carefully," Subir Gokarn, the newly-appointed central bank deputy governor, told reporters.

"How we balance it, how we sequence it, I think, are challenges we have to address. But even as we do that, the risks of destabilising or upsetting the applecart... those risks are high. You cannot underestimate that."

In its monetary review last month, the Reserve Bank of India (RBI) said it would withdraw emergency liquidity measures and increased some loan provisioning requirements, but left its key policy rates unchanged.

The RBI has lowered its repo rate, at which it lends short-term funds to banks, by 425 basis points between October and April to 4.75 percent.

The reverse repo rate, at which the central bank absorbs surplus cash, has been cut by 275 basis points to 3.25 percent.

Gokarn said economic outlook was better than a year ago.

"The situation, in terms of economic outlook, compared to a year ago, is far more comfortable and it gives policymakers little bit of breathing space in terms of being able to come back to normal set of considerations," he said.

"We are on our course of recovery, but it is still a situation fraught with threats. Some of these threats could be domestic, some could be external. We have to maintain a balance. We cannot ignore external circumstances," he added.