By IANS,
New Delhi : The Reserve Bank must be careful while tightening its monetary policy to address concerns over inflation because ensuring high growth is an equally important task, Planning Commission Deputy Chairman Montek Singh Ahluwalia said Wednesday.
“The balance between controlling inflation and protecting growth is an issue which the people responsible for short-term monetary policy have to take a look at. That is an issue I want the RBI to consider very carefully,” Ahluwalia told reporters here.
“Inflation is getting much more into the worrying area. Secondly, we’re much more confident the growth is picking up,” said Ahluwalia.
The central bank is expected to hike key policy rates in an attempt to make credit costlier and keep inflation in check.
Asked if strong growth and high inflation made a case for a return to normal policy stance, Ahluwalia said the central bank would take a decision considering all possible implications. “I have no doubt they will make the right decision.”
India’s economy is predicted to grow at over 7.2 percent in the current fiscal and expand at 8.5 percent in 2010-11.
India’s annual wholesale price inflation rose to 9.89 percent in February. Finance Minister Pranab Mukherjee Tuesday said it could increase to over 10 percent in March.
Ahluwalia said that the even if inflation touched the double digit mark, it would not likely to stay at such high levels and would decline soon.
“Over the next two months, I expect to see inflation coming down,” he said.