"You don't blame the RBI for killing growth, you blame inflation for killing growth...Our pursuing moderate or low inflation objective is to facilitate growth and not to kill growth," he said, addressing students of a management school.

"The basic complaint against RBI is that it is killing growth by keeping interest rate high. But people forget that interest rate is high because inflation is high and inflation is high because people are not working. For inflation to come down, you have to produce more food grains at less prices," he said.

A growth rate of above 9 percent is possible only if inflation comes down to 5 percent level, he added. In his maiden policy review, Governor Raghuram Rajan took everyone by surprise by raising the repo rate by 0.25 percent on fresh concerns emanating on the inflation front.

With growth falling to record lows, there were heightened expectations that Rajan would announce, or give a direction to growth-positive actions. To unlock liquidity, he reduced the marginal standing facility by 0.75 percent to bring it down to two percentage points above the repo rate.

Chakrabarty also said that liquidity-tightening measures ushered in to arrest the fall of rupee are temporary in nature and will be taken back once the situation normalizes.

(Agencies)                       

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