By IANS,
Mumbai: India’s central bank will conduct a mid-quarter review of its monetary policy for fiscal 2010-11 Thursday amid worries over the continuing price rise that has further pushed up India’s annual inflation rate.
Reserve Bank of India (RBI) Governor D. Subbarao will conduct the review at the central bank’s headquarters at Mint Street here and issue a statement at noon on the steps taken, officials said.
In January, the central bank had hiked its policy rates for the seventh time in a year as it sharply revised upward its annual inflation forecast to 7 percent by the end of this fiscal from 5.5 percent earlier.
Ahead of the review, leading industry chambers have suggested a cut in the government’s non-plan, non-productive expenditure, as opposed to steps to curb money supply, to rein in prices. They feel the current inflation spike is due to supply-side factors.
“The choice of monetary action with continued fiscal profligacy has so far not resulted in desired benefits. The government needs to get down to the core of the issue and take up necessary action,” said the Associated Chambers of Commerce and Industry (Assocham).
“Inflationary pressures are building and there is a large camp that believes interest rates must go up,” said Siddharth Shankar, economist and director with the Delhi-based financial services organisation Kaasa.
“But to my mind inflation is a supply constraint phenomenon and cannot be resolved merely by monetary measures,” Shankar added.