The Hindu Business Line : `Govt with RBI in curbing inflation'

WORKING TOGETHER: (From left) The Finance Minister, Mr P. Chidambaram; the RBI Governor, Dr Y.V. Reddy; and the Deputy Governor, Mr Rakesh Mohan, at the Central Board meeting of the RBI, in the Capital on Friday. - Ramesh Sharma

New Delhi March 9 The Finance Minister, Mr P. Chidambaram, on Friday told the Central Board of the Reserve Bank of India that inflation has to be moderated without hurting economic growth.

"I have conveyed to the Central Board of RBI what the Prime Minister said in Parliament yesterday.

The goal is to moderate inflation without affecting growth," Mr Chidambaram told newspersons after addressing a customary post-Budget meeting of the Central Board of the RBI.

The Government wants the RBI to conduct monetary policy in a manner that ensures price stability without affecting the current high growth of the economy.

The Finance Minister said the Government fully supported the monetary measures taken by the RBI (to curb inflation) and would continue to stand by and support the Central Bank when it takes more monetary measures as and when considered necessary.

"It is important that inflation gets moderated. It is easier said than done. But I am confident that working together with RBI, we will be able to moderate inflation," Mr Chidambaram said.

The Finance Minister's comment on inflation came on a day when the wholesale price index (WPI)-based inflation rose to 6.10 per cent in the 12-month period ended February 24, slightly higher than the 6.05 per cent annual increase recorded for the previous week.

He said the members of the RBI board "broadly welcomed" the new thrust of the Union Budget 2007-08 on agriculture, thrust towards inclusive growth and the emphasis placed on the social sector.

Oil shock

He said the RBI Governor, Dr Y.V.Reddy, pointed out that India had for the last three years, unlike in the past, managed oil shock without instability.

"In the earlier oil shocks, we had instability. In the last 3 years, we had managed a severe oil shock without instability. When oil shock eased, we had supply side constraint on food items. Even that has been managed with only moderate inflation," Mr Chidambaram said.

He added the RBI board members wanted him to pay special attention to edible oil seeds, milk and fertilisers.

"The Budget has placed emphasis on pulses and cereals, but they said kindly place more attention on edible oil seeds, milk and fertilisers. The point is well taken," he said.