New Delhi: Concerned over worsening political turmoil in the Middle-East and the impact of rising global crude prices on the domestic economy, the Finance Ministry tells the Reserve Bank of India to focus on steps to contain inflation. (Agencies)
An indication to this affect was given by Finance Minister Pranab Mukherjee to the RBI, which is slated to announce its mid-quarterly review of the monetary policy on March 17.
The RBI has for the seventh time since March 2010, raised the key policy rates to tame inflation, which of late has started declining.
However, with the surge in international crude oil prices following political turmoil in the Middle East and North Africa region, it is unlikely that inflation would fall in the months ahead.
Mukherjee in his address to the RBI Board last week stressed on the need for sustaining post-crisis economic recovery and growth momentum, while keeping inflation in check against the uncertainty of oil price rise.
"This (keeping inflation in check) is essential for furthering the government’s agenda on inclusive development", the Minister told the RBI board headed by Governor D Subbarao.
Crude prices in the international market have escalated to USD 116 a barrel. Nearly 75 percent of the oil in India is imported and a spurt in price would have adverse affect on the economy.
The government and the RBI have been under pressure due to inflationary pressures in the economy, particularly the high food prices.
Food inflation, though moving downward, has been in double digits for the current fiscal. The latest data puts the food inflation at 10.39 percent for the week ending February 19.
Inflation has also been declining; it stood at 8.23 percent in January and 8.43 percent in December. However, this is still much above the comfort level and the government expects it to descend further to 7 percent in March.
On its part, the government has taken several steps like banning exports of certain items like wheat and reducing or eliminating duties on some products to increase their availability in the domestic markets.
New Delhi: Concerned over worsening political turmoil in the Middle-East and the impact of rising global crude prices on the domestic economy, the Finance Ministry tells the Reserve Bank of India to focus on steps to contain inflation.