To say RBI is obsessed with inflation in inaccurate: Subbarao

The RBI Governor said the first and possibly the most important debate was about balancing between growth and inflation in the policy context

Days before he steps down as Governor of RBI, a candid D Subbarao today characterised as 'inaccurate and unfair' the contention that the central bank was 'obsessed with inflation, oblivious to growth concerns'.

 

Terming as oversimplification that governments are for growth and central banks are for price stability, he said, it was another oversimplification to assert that there is a tension between growth and inflation and that one has to play a trade off between the two in policy making.

 

'To contend that the Reserve Bank is obsessed with inflation, oblivious to growth concerns, I think, is both inaccurate and unfair,' he said at a function at the Prime Minister's residence to release the fourth volume of RBI history.

 

Subbarao's remarks come against the backdrop of Finance Minister P Chidambaram's assertions in recent weeks that RBI should not focus solely on on containing inflation but also look at the larger mandate of growth and job creation.

 

The Governor, who will demit office on September 4, spoke on growth-inflation balance and said the first and possibly the most important debate was about balancing between growth and inflation in the policy context.