Justifying RBI’s surprising move of hiking key policy rates by 25 basis points, Deputy Chairman of Planning Commission Montek Singh Ahluwalia underscored that bringing down inflation remains country’s top priority and RBI’s third quarter monetary policy is just reiteration of its commitment of bringing down inflation.
Further, batting on behalf of RBI, he stated that RBI clearly wants to send a signal that it was not taking inflation lightly, also as short-term lowering of repo rates would not make a long-term difference. He also added that interest rates would reduce only with a decline in inflation, which must be high on the priority list.
However, on Rajan’s expectations of economy growth below 5 per cent in the current financial year, Ahluwalia said that it was bit premature to come to any conclusion that GDP growth rate for 2013-14 could be below 5 per cent.
Further, batting on behalf of RBI, he stated that RBI clearly wants to send a signal that it was not taking inflation lightly, also as short-term lowering of repo rates would not make a long-term difference. He also added that interest rates would reduce only with a decline in inflation, which must be high on the priority list.
However, on Rajan’s expectations of economy growth below 5 per cent in the current financial year, Ahluwalia said that it was bit premature to come to any conclusion that GDP growth rate for 2013-14 could be below 5 per cent.
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