Recent cash steps will not hurt growth: Subbarao

Says central bank just as anxious to roll back cash tightening steps

Reserve Bank of India Governor Duvvuri Subbarao said on Thursday that the central bank is as anxious as everyone else to roll back the recent cash tightening steps. However, the measures will be in place until volatility in the foreign exchange market is controlled, he said.

He said the cash tightening measures will not hurt growth, although there might be pain in the short-term.

Having a stable exchange rate is important for growth to take off, he added.

Last month, the RBI further lowered the limit for borrowing by banks under the daily liquidity adjustment facility (LAF) and increased their cash reserve ratio requirements.

He reiterated that the central bank does not target any exchange rate level for the rupee.

High consumer price inflation, he said is due to cyclical and distributional problems. However, at demand level, the inflation has come down, he said.

Consumer price inflation had picked up in June to 9.87%, after slowing for three straight months.