RBI, Govt not antagonistic to each other, says Chidambaram

Finance Minister P Chidambaram today rejected the perception that his ministry and RBI were at loggerheads over interest rates and other issues, and said that they were not "antagonistic" to each other.

"The equation between the government and the central bank in India is the same as the equation between the government and the central bank of any country. It is always arguing for growth on the part of government and arguing for stability and taming inflation on the part of the central bank," he told PTI in an interview.

Even as the government makes out a case for the central bank to support growth, it doesn't mean "they (the Finance Ministry and the RBI) are antagonistic to each other", he said. "What we are trying to do is to argue our case, argue the case for growth, argue the case for taming inflation and then of course whatever the judgement is arrived at...," the Minister added.

Emphasising that the relationship is no different between these two entities in any other country, Chidambaram said that during his recent visit to Mexico city for G-20 meeting, along with RBI Governor D Subbarao, he had "spoken to several governors and several finance ministers, the relationship is exactly the same".

Despite the Finance Minister coming out with a fiscal consolidation roadmap and addressing central bank's concerns over government finances, the RBI did not reduce the interest rates in its half-yearly credit policy review on October 30. RBI Governor D Subbarao has maintained that inflation at 7.45 per cent is still "quite high" for he central bank to go in for reducing interest rates.

However, the Finance Ministry is concerned over slowdown in the economic growth with the industrial output turning negative in September by 0.4 per cent.