Need better demand-supply level:Reddy -Video

Need better demand-supply level:Reddy -Video

BS Reporter / Mumbai April 27, 2007

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YV Reddy, Governor, RBI at an international conference on Emerging Challenges to the Indian Financial System today said, the regulator has had to use a peculiar combination of discouraging credit to certain sectors where there are too much demand pressures and prices are moving too fast, while encouraging more credit to sectors that would augment supplies and lead to better demand-supply balance.

This is a more pragmatic approach rather than an ideological approach, he said.

The financial sector is moving with inherent strength and efficiency. The next step would be to develop the corporate debt market and settlement of foreign exchange transactions...which would not have been possible 7-8 years back.  In the forex market, there is greater flexibility in rates, Reddy said.

The inflation target of 5% was a self-imposed ceiling by the apex bank so as to ensure alignment with global inflation levels as the country integrates with the global economy.