RBI needs to look at growth: FM

A day ahead of RBI’s monetary policy review, Finance Minister P Chidambaram on Monday said the mandate of a central bank is not only to ensure price stability but also to promote growth and generate employment.

Stating he did not expect any hike in interest rates by the commercial banks, the Minister said they had enough funds to meet credit demands and that the onus of coming up with large investment projects rests with the industry.

“All over the world thinking in changing. The mandate of a central bank must not only be price stability. The mandate of central bank must be seen as part of larger mandate which includes price stability, growth and maximising employment,” he said.

Chidambaram’s statement comes on the eve of Reserve Bank’s first quarter monetary review in which the central bank is expected to address the several conflicting concerns including volatile exchange rate, liquidity crunch and slowing growth.

RBI Governor D Subbarao had last week met Prime Minister Manmohan Singh and Chidambaram and is believed to have discussed the current macro-economic situation.

“I have tried to argue that while I acknowledge that the central banks mandate is price stability, price stability must be seen as part of larger mandate of growth and employment,” said Chidambaram while speaking at a function here.

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