There is a need to tackle the “persistently” high inflation to make the Reserve Bank of India’s position more comfortable, governor of the apex bank Raghuram Rajan said on Thursday.
“The real problem is inflation that is persistent. We have been emphasising again and again in order to break the back of inflation, we got to break this persistence. Once we do it, we can then be much more comfortable,” Rajan said at the 8th Statistics Day Conference at the RBI headquarters.
The retail inflation declined to 7.8% in August from 7.96% in July and 9.52% in August 2013.
The RBI has targeted retail inflation measured on consumer price index at 8% by January 2015 and at 6% by 2016.
While corporate India has been demanding lower interest rates for some time now, the governor has consistently maintained that rates would only be cut if the retail inflation came down as per its targets.
The RBI will unveil its next bi-monthly monetary policy on September 30. In the previous policy announcement in August, the RBI the repo rate, the rate at which the RBI lends money to commercial banks, at 8%, citing inflation and monsoon worries.
Separately in his address on Thursday, Rajan noted that various economic data available in the country was not very comprehensive and said there was an urgent need to improve it.
For instance, he felt that the employment data, which formed the basis for various monetary policy related decisions in various countries, came with a lag in India.
“We need to work on getting a timely and comprehensive employment data base, perhaps on the monthly level,” Rajan said, adding that the RBI was working with the National Sample Survey Organisation to create a strong database on employment.