Mumbai, Sep 29 (Inditop.com) Choices with regards to policy changes like revision of monetary policy are becoming increasingly “complex” for India’s central bank as signs of economic recovery continue to be tentative even while inflation firms up, a top bank official said.
“The policy choices are becoming increasingly complex for the RBI, as signs of recovery in growth are still tentative, whereas inflation is clearly firming up,” said Reserve Bank of India (RBI) Deputy Governor K.C. Chakrabarty in Colombo.
In a statement on its website Tuesday, RBI quoted Chakrabarty as saying that while there were indications like recovery in industrial output during April-July and higher relative growth in infrastructure, there also existed risks that could hamper economic revival.
“The downside risks include the impact of the deficient monsoon on agricultural growth, (and) decline in exports for the 10th successive month up to July 2009 because of the persistent global recession,” Chakrabarty said at the 21st annual convention of the Association of Professional Bankers in the Sri Lankan capital.
In addition to these, a decline in tourist arrivals in August, which was partly on account of the swine flu fear, and more importantly the rising inflationary pressures were problems that could slow down economic growth, he added.
“That could limit the scope for sustained growth supportive monetary policy stance,” said Chakrabarty.
