FM not enthused by RBI's stance

Apparently not enthused  by the Reserve Bank of India's cautious stance, Finance Minister P Chidambaram said on Tuesday that growth is as much a challenge as containing inflation and government would 'walk alone' to face the challenge if it comes to that.

"Growth is as much a challenge as inflation. If government has to walk alone to face the challenge of growth, then we will walk alone," he said in his reaction to the RBI's second quarter policy review.

Chidambaram was apparently upset over RBI's decision to leave interest rates unchanged on inflation concerns despite the government unveiling a five-year fiscal consolidation road map ahead of the policy.

Although the RBI has lowered the cash reserve ratio, the portion of deposit banks have to park with the apex bank, by 0.25 per cent, it did not cut interest rates in view on persistent inflationary pressures.

Wholesale Price Index inflation stood at 7.81 per cent in September, much above the RBI's comfort level of 4-4.5 per cent.

"Government is doing its best to send the clear message that we are on the path of fiscal consolidation. It is my hope that everyone will read and understand the government commitment to path of fiscal consolidation," Chidambaram said.

On the policy statement, he quipped: "I have not read the last few paragraphs of the statement but if it holds out hope for the future I look forward to that future".

He was apparently referring to the RBI's policy guidance of a likelihood of policy easing in the January-March quarter of the current fiscal.

Chidambaram further said: "Sometimes it is best to speak, sometimes it is best to remain silent. This is the time for silence".

Image: P Chidambaram