Finance Minister Pranab Mukherjee on Sunday said the Reserve Bank of India (RBI) will try to strike a balance between growth and inflation at its monetary policy review next week.
"The RBI is trying to find a balance between the need of growth and the need to contain inflation," Mukherjee told reporters after laying the foundation stone of IFCI-promoted Management Development Institute's new campus here.
However, he refused to give any guidance on the steps likely to be taken by the central bank at its November 2 monetary policy review.
"We have to wait till monetary review by RBI," he said.
The RBI is expected to increase short-time lending and borrowing rates by 25 basis points each at the forthcoming quarterly monetary policy review.
The economy is giving conflicting signals, with inflation still at high levels, whereas core sector growth has slowed down considerably.
Despite moderation, the high levels of inflation have emerged as a major political issue. Overall inflation was 8.6 per cent in September. However,for the week ended October 16, food inflation stood at a high 13.75 per cent, even though this was down 1.78 percentage points vis-a-vis the previous week on the back of improved food supplies.
The Finance Minister said that prices of certain items generally go up in the rainy season,
but admitted that this time around, the upward spiral had persisted for a longer duration than usual. "No doubt, inflation is a concern."
However, he added that the inflation numbers have started coming down and all three consumer price indexes and wholesale price-based inflation numbers were in single digits for the first time in sixteen months.
He asked states to revamp the public distribution system to protect the poor from inflation.
Mukherjee said the government programme for providing subsidised rice and wheat to 6.5 crore below poverty line (BPL) families, including 2.5 crore Antyodaya Anna Yojana (AAY) cardholders, can be successfully implented only if the public distribution system is revamped.