The Hindu Business Line : Chidambaram to address RBI board on Friday

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New Delhi March 6 The Finance Minister, Mr P. Chidambaram, will address the Central Board of Directors of the Reserve Bank of India here on Friday.

Sources described this as a customary post-budget meeting. Besides the state of the economy and its growth prospects, indications are that `inflation' and the steps taken by the RBI and the Union Government would come in for elaborate discussion at the meeting.

The Indian economy is expected to grow 9.2 per cent this fiscal. High inflation continues to be a sore point for the Government during the current fiscal even as a slew of monetary, fiscal and supply side augmentation measures have been taken during 2006-07. These measures have brought little relief to the common man, especially on the essential commodities front.

Inflation check

The wholesale price index (WPI)-based inflation for the week ended February 17 stood at 6.05 per cent, well above the upper limit of the RBI's projected range of 5-5.5 per cent for this fiscal.

The meeting may also discuss the proposed stake transfer in State Bank of India between the RBI and the Government.

In Budget 2007-08, the Finance Minister had announced that the Government proposes to acquire RBI's equity holding in SBI.

He had also said that a sum of Rs 40,000 crore has been provided for this purpose and that the transaction would be "deficit neutral" to the Government.

Budget 2007-08 has assumed receipts of Rs 40,000 crore as one-time transfer from RBI of proceeds on account of transfer of its stake in SBI to the Union Government. Simultaneously, a provision has been made for payment of the same amount by the Union Government under the head `payments to Financial Institutions.' The entire transaction has been so-accounted as to leave the deficit indicators un-impacted.