RBI hints at stringent steps to rein in inflation

Reserve Bank of India (RBI) today warned that inflation was way beyond the tolerable limit and hinted at stringent policy measures to keep price rise under check.    

The immediate challenge is to bring down inflation to a tolerable level as soon as possible and maintain financial stability, the apex bank said, adding that eight per cent growth this year is realistic.

Earlier in the day, government released data had put economic growth for the first quarter of this fiscal at 7.9 per cent.     

A realistic policy endeavour would be to bring down inflation from the prevailing level of 11-12 per cent to a level close to 7 per cent by March 31, 2009, the bank said its annual report for 2007-08.     

The RBI's objective would be to bring down the prevailing intolerable level of inflation, now at 12.40 per cent, to a tolerable level of below 5 per cent as soon as possible and around 3 per cent in the medium-term, it said.     

There were some downside risks to growth and upward pressures on inflation in the near-term.

But the prospects in the medium and long-term term continues to be robust for the economy, RBI said in     

The apex bank said an 8 per cent growth this year is realistic given the prevailing economic conditions.

Earlier, the Reserve Bank had projected an 8-8.5 per cent growth.      

There is a need to persist with reforms in all sectors to realise the full potential of the economy, RBI said.