High inflation hurting the poor: Subbarao

A day after telling management students here that inflation in the country remained high, Reserve Bank of India governor D Subbarao on Wednesday chose a different platform to deliver the same message.

Speaking in chaste Hindi at a public meeting in Barabanki district on the outskirts of this city, the RBI governor said the high inflation rate, especially in food and clothing items, was affecting all sections of society, and mainly the poor.

“We have been able to soften the inflation rate to some extent in the last two years. Yet, I have to admit it still continues to be high. Controlling inflation is our priority and will always be. Only this could provide succour to the poor,” he underlined.

The statement comes just a fortnight ahead of the third quarter monetary policy review. There has been a clamour for reducing key policy rates to boost economic and industrial growth.

Headline inflation, as measured by the wholesale price index, dropped to 7.18 per cent in December, the lowest since December 2009, from 7.24 per cent in November. Core inflation fell to 4.2 per cent, signalling a softening in prices. Retail inflation, however, climbed back into double digits, at 10.56 per cent in December.

The governor was addressing an outreach programme on ‘Financial literacy and financial inclusion’ at Lalpur Karauta village. The area’s Member of Parliament, legislator, senior state government and commercial bank officials were present.

Urging commercial and rural banks to open more branches in the hinterland, Subbarao asked people to repay loans on time to help maintain the financial health of banks.

He touched on the topics of fake currency notes in circulation and fake RBI letterheads informing gullible people about winning lottery. He said people should unhesitatingly inform the police to help check the menace.

“Our offices are located in big cities and we try to understand rural events and lifestyle through newspaper reports. Actually, we do not get opportunities to meet the rural populace,” he regretted. But, added in the last four years, his colleagues and he had made an effort to visit several villages.

Subbarao asked banks to meet the target of providing banking facilities to small towns soon. “The target of RBI is to ensure that every family have a bank account," he said.