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'Choking demand through monetary action suicidal for growth'

Last Updated: Sunday, October 21, 2012 - 15:47

New Delhi: The Reserve bank should not always use monetary tools to control inflation as choking demand will be "suicidal" for economic growth, Assocham said Sunday.

The chamber said that in a study a majority of 200 participants said that it is wrong on the part of RBI to be obsessed with always using monetary tools to control inflation.

"The price rise cannot and should not always be controlled by choking demand, that will be suicidal for growth. In the name of sustainable and long-term growth, we cannot afford to kill the growth," it said in a statement

It said that to boost investments and revive the country's economic growth which grew by a decade low of 5.5 percent during the first quarter of this fiscal.

In September, inflation rose to 7.81 percent, a 10-month high from 7.55 percent in the previous month.

During April-August 2012, industrial output was 0.4 percent, down from 5.6 percent in the same period in 2011-12.

The RBI is scheduled to unveil its second quarter review of the credit policy on October 30.

Further, the study said, even if the country's fiscal deficit for 2012-13 may not strictly follow the Budget estimates, it is expected to remain less than 5.5 percent of the GDP, which is credible given the challenges that are before the economy.

The government in its 2012-13 Budget had estimated the country's economic growth in the range of 7.6 percent and fiscal deficit at 5.1 percent.


First Published: Sunday, October 21, 2012 - 15:47
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