In­fla­tion in In­dia is “quite high”, says RBI chief

The Pak Banker - - Front Page -

NEW DELHI

Amidst de­mand for eas­ing of in­ter­est rate, Re­serve Bank of In­dia (RBI) Gover­nor D Sub­barao on Fri­day said in­fla­tion is “quite high” at 7.45 per cent even as the bank is con­scious about eco­nomic growth. His re­marks come as head­line in­fla­tion fell to an eight­month low of 7.45 per cent in Oc­to­ber from 7.81 per cent in the pre­vi­ous month.

“At 7.45 per cent in­fla­tion is cer­tainly quite high,” Dr. Sub­barao told re­porters on the side­lines of a func­tion here, adding the cen­tral bank is al­ways on “high alert” on the in­fla­tion front.

Dr. Sub­barao said the RBI was also con­cerned about eco­nomic growth. “We’re al­ways on high alert, high alert about growth, about in­fla­tion cer­tainly,” Dr. Sub­barao said. His com­ment comes amidst hopes of the gov­ern­ment and in­dus­try of early mone­tary eas­ing by RBI on the back of fall­ing in­fla­tion and neg­a­tive in­dus­trial growth.

The fac­tory out­put con­tracted by 0.40 per cent in Septem­ber, driven by a deeper con­trac­tion in cap­i­tal goods sec­tor. In the first quar­ter, GDP grew by 5.5 per cent.

In the busy sea­son credit pol­icy an­nounced on Oc­to­ber 30, Dr. Sub­barao had said he expected price pres­sures to ease only in the first part of 2013 and had in­di­cated that any eas­ing of in­ter­est rate would hap­pen only in Jan­uary.

The next mid- quar­ter re­view of mone­tary pol­icy for 2012-13 would take place on De­cem­ber 18. Ear­lier, in­au­gu­rat­ing an RBI con­fer­ence on ‘ Lever­ag­ing Co­op­er­a­tive Ad­van­tage’, Dr. Sub­barao said de­spite in­fir­mi­ties, co­op­er­a­tive banks are play­ing a vi­tal role in fur­ther­ing fi­nan­cial in­clu­sion.

He noted that as on April 1, 2012 there still re­mained 41 co­op­er­a­tive banks which could not meet even re­laxed li­cens­ing norms.

“To main­tain in­tegrity of co­op­er­a­tive sys­tem and pro­tect pub­lic in­ter­ests, the RBI im­posed direc­tions on these 41 banks pro­hibit­ing them from ac­cept­ing fresh de­posits,” he said.

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