'Deciding on inflation vs growth RBI's prerogative'

Amid the Reserve Bank of India (RBI) maintaining status quo on policy rates and the cash reserve ratio, Economic Affairs Secretary R Gopalan has said it is for RBI to decide between inflation and growth.

“It is a question of making a fine judgement, and RBI is the authority to make that judgement. It has taken a call,” Gopalan said at a press conference. He added some felt core inflation was less than five per cent in the last three months, and the problem of inflation could be solved. However, there were others who felt food inflation had not abated, and this could transform into inflationary expectations and stoke inflation further.

He said there were a number of issues on the table. A number of people said unless the investment process was kick-started, the country would not be in a position to increase the output required to achieve its growth target. There were others who believed manufacturing capacity was still not being fully utilised, he said. Therefore, there were issues that had to be considered to ensure people started investing, he said, adding these included asking public sector units to start investing with the cash pile these were sitting on.