While the RBI Deputy Governor Rakesh Mohan has opined it would not be appropriate, Union Minister of State for Finance P K Bansal, though, averred that reining in inflation would be Centre’s top most priority.

According to Mr Mohan inflation targeting may not be appropriate for India as sustaining growth was also an objective for world’s second-fastest growing major economy after China. However, Mr Bansal, in a written reply, told the Rajya Sabhia that containment of inflation remains high on the country’s agenda.

Delivering an address at Yale University, Mr Mohan has said “unlike many other developing countries we have had record of moderate inflation, with double-digit inflation being exception, and which is largely socially unacceptable.” The Centre has not raised state-set fuel prices for nearly one-and-a-half years despite high world crude prices, the RBI deputy governor said pointing out India last revised prices of petrol and diesel in February, when they were cut.

Enhanced vigilance
The country’s inflation remains low and expectations appear to be consistent and stable, though global commodity, food and crude prices were high, he said adding that RBI was on enhanced vigilance to respond appropriately to global uncertainties.  

The threshold of inflation tolerance in the economy has come down significantly and that the challenge for monetary policy was to reduce inflation in the medium term towards international levels, the RBI deputy governor observed.