Prime MinisterÂ’s key economic advisor C Rangarajan has on September 12 said that the Reserve Bank of India (RBI) must continue its tight monetary policy until stability in the rupee value is achieved. Thereafter, if the current trend in the moderation of wholesale price inflation continues, which is in fact expected, the monetary authorities can switch to a policy of easing, Rangarajan said while releasing the Economic Outlook for 2013-14 in Delhi.
Rangarajan lowered the growth forecast for the current fiscal to 5.3 per cent from 6.4 per cent projected earlier. Inflation at the end of March is estimated at 5.5 per cent, he added.
He added that the time frame for this is difficult to specify and much depends on stability in the foreign exchange markets. The rupee depreciated to 63.50 against the dollar on September 11 from 54.99 on December 31. Raghuram Rajan, who took over as RBI Governor on September 4, said that apart from monetary stability, the central bank has the mandate for inclusive growth and development as well as financial stability.
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