New Delhi: The Reserve Bank Deputy Governor
Subir Gokarn on Saturday said exiting from the accommodative money
policy has to be a gradual process and cannot be done at one
single stroke.
A surprise 7.9 percent Q2 growth numbers is a new
element but not the only factor in determining the monetary
policy, while inflation is giving divergent signals between
the rate of rise in prices of food and manufactured items,
Gokarn told reporters here today.
"When you talk of exit policies, you have to see it as a
graded process and not a one-off approach. Focusing on growth
for one year to abandoning growth to focus on inflation is a
transition...Growth number is one input to them it is not the
only factor," he said on the sidelines of a Ficci seminar.
It can be noted that food inflation had crossed 17 percent in the third week of November, while overall inflation
was just 1.34 percent in October.
"You have huge divergence here and it is a little unfair
to say that we should be looking at only 17 percent and not
at 1.34 percent.
We have to take all perspective on inflation and the
significance of food inflation is that it is a risk that
translates into wider spiral through expectations and that is
something we have to be concerned about," Gokarn said.
Gokarn agreed that the central bank's focus has now
shifted from just promoting economic growth to striking a
balance between economic expansion and curbing inflation.
"We have to ensure that recovery is not hurt while at
the same time ensure that inflationary pressure do not go out
of control," the RBI Deputy Governor said.
After the global financial crisis deepened following
the
collapse of the American financial powerhouse Lehman Brothers
in the middle of September last year, RBI has unleashed many
liquidity easing measures.
It has for the first time hinted exiting from these
measures symbolically at the October monetary review.
He also said growth forecast for this fiscal might be
upped after the strong second quarter numbers. When asked
whether growth numbers would be revised by RBI, he said,
"possibly." RBI has projected six percent GDP growth with an
upward bias.
Gokarn expects credit growth to pick up if the economic
recovery is sustained.
PTI
First Published: Saturday, December 05, 2009, 15:54