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Growth Important, But Not at Cost of Inflation: RBI Governor Urjit Patel

"Growth is always there in the MPC's scheme of things; we don't lose sight of that, but not at the cost of inflation," Patel said.

Reuters

Updated:October 9, 2017, 11:12 AM IST
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Growth Important, But Not at Cost of Inflation: RBI Governor Urjit Patel
RBI Governor, Urjit Patel at a press conference in New Delhi. (PTI)
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Mumbai: Fostering monetary conditions conducive to economic growth were a constant consideration for Indian policymakers, but would not take priority over achieving the central bank's inflation target, Governor Urjit Patel told a newspaper on Monday.

Patel told the Mint newspaper that the economy was recovering, after growth slowed to a three-year low of 5.7 percent in the April-June quarter.

The slowdown had sparked some calls for lower interest rates, but with inflation rising the RBI left rates unchanged at a review by the monetary policy committee (MPC) last week.

"Growth is always there in the MPC's scheme of things; we don't lose sight of that, but not at the cost of inflation," Patel was quoted as saying in the interview.

"However, we have to be careful — we should aim at achieving the inflation target without losing sight of supporting economic growth."

Consumer inflation accelerated to 3.36 percent in August. India's central bank has a medium-term target for annual inflation of 4 percent with the flexbility of plus/minus 2 percent on either side to make room for food price volatility.

The (MPC) will strive to achieve its 4 percent inflation target on a "durable basis", Patel said.

Last week, the RBI kept its repo rate unchanged at 6.00 percent as expected last week, and raised inflation projections, cooling hopes for future rate cuts.

However, Patel said growth was already starting to recover. The RBI last week cut its projection for gross value added - an indicator of growth it prefers to 6.7 percent from 7.3 percent for the year ending in March - higher than some analyst forecasts.

"Our projections based on high-frequency real economy indicators suggest that growth will pick up in the third and fourth quarters (of the current fiscal year) to above 7 percent," he told Mint.

"We have started seeing the upturn."
(Get detailed and live results of each and every seat of the state Assemblies in Madhya Pradesh, Rajasthan, Telangana, Chhattisgarh and Mizoram to know which candidate/party is leading or trailing and to know who has won and who has lost and by what margin. Our one-of-its-kind Election Analytics Centre lets you put on the psephologist's hat. Know interesting facts and trivia about the elections. Elections = News18)
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