HT Image
HT Image

‘Growth as critical as price stability’

RBI Governor YV Reddy says the overall picture points to inflation slowing to 4.5% in the medium term, reports BS Srinivasalu Reddy.
By BS Srinivasalu Reddy | None
UPDATED ON MAY 07, 2007 03:05 PM IST

Reserve Bank of India Governor YV Reddy again sprung a surprise by giving interest rate hikes a pause in the annual review of the credit policy. In an interview with BS Srinivasalu Reddy after announcing the credit policy on Tuesday, the governor said the overall picture pointed to inflation slowing to 4.5 per cent in the medium term.

Excerpts:

Q: When will inflation be back under control?

Though neutral inflation and interest rate levels are possible, theoretically, one cannot be specific about their levels. It is very difficult to define precisely. I don’t think any monetary authority will be in a position to take a call on that. Besides, it is not possible to take a view on how long we can stay at that level, even if we can identify such a level.

But for a limited point, we can discuss what is the size of reasonable stability. Growth has been high for the last four years and inflation has been at 5 per cent. Growth has been happening across emerging market economies. A reasonable level of domestic savings is funding our investments – they cover up to 98 per cent of our investments. And the current account deficit is only 2 per cent. Though there are short-term variations, the environment has generally contributed to both growth and stability.

Q: Last April you kept interest rates untouched. You hiked them later. In one year rates were hiked five times. Where are interest headed – up or down?

Whatever was the stance three months back still continues to hold good now. If there are any changes in the circumstances then I have to respond. In the case of the (US) Federal Reserve and Bank of England there are committees that decide. In our case, the decision lies as it was, with the RBI, with responsibility and accountability attached.

Q: So, at any given point in time you are free to hike the rate?
That is how the position is. That is how the process works.

Q: There seems to be a clear shift in your language this time. You seems to be shifting more towards growth than before? Is there a real shift in approach?

No, not at all. On the contrary, the RBI mandate is somewhat similar to that of the Federal Reserve, where growth and (price) stability are on an equal standing. The emphasis has to be contextual and based on circumstances. When credit growth was not strong in the past we have emphasised growth and pressed banks for increasing the credit flow. When we feel the focus should shift to price stability, we shift the emphasis. That is what is happening now. You can see the current policy has been re-stated from the past (a few years ago).


Q: How realistic is your expectation of containing inflation to 5 per cent?

Currently, the idea is to get to 5 per cent. That is, of course, subject to supply management and overall management of the capital account. Taking the overall picture into account, in the context of policy measures globally, we may see 4.5 per cent as well.

If it is above 6 per cent for a few weeks now, we want to intervene in a non-disruptive manner, that too at a time when we are going through a structural transformation. The idea is to make it non-disruptive.

SHARE THIS ARTICLE ON
Close
Union minister of state for finance and corporate affairs Anurag Thakur on Saturday addressed the Punjab chapter of Entrepreneurs Organisation. (ANI File Photo )
Union minister of state for finance and corporate affairs Anurag Thakur on Saturday addressed the Punjab chapter of Entrepreneurs Organisation. (ANI File Photo )

On cryptocurrency, Anurag Thakur says ‘innovation welcomed, must evaluate ideas’

By hindustantimes.com | Written by Kanishka Sarkar, Hindustan Times, New Delhi
PUBLISHED ON MAR 06, 2021 09:09 PM IST
Anurag Thakur’s remark comes days after the Reserve bank of India (RBI) governor Shaktikanta Das flagged “major concerns” about the impact of cryptocurrencies on financial stability.
Close
The chairman of the 15th Finance Commission NK Singh(Sonu Mehta/ HT Archive)
The chairman of the 15th Finance Commission NK Singh(Sonu Mehta/ HT Archive)

Opted for continuity in deciding tax devolution to states: FC chairman N K Singh

PTI
UPDATED ON MAR 06, 2021 07:39 PM IST
  • The 15th Finance Commission has recommended that states be given 41 per cent of the divisible tax pool of the Centre during the period 2021-22 to 2025-26, which is at the same level as was recommended by the 14th Finance Commission.
Close
Other than tax-saving investments, taxpayers also need to complete other tax-related tasks in order to avoid penalties.(Reuters)
Other than tax-saving investments, taxpayers also need to complete other tax-related tasks in order to avoid penalties.(Reuters)

From ITR to PAN-Aadhaar linking: Tax-related tasks to complete before March 31

By hindustantimes.com | Edited by Mallika Soni
UPDATED ON MAR 06, 2021 04:45 PM IST
  • Here’s a list of some of the tasks which need to be performed by taxpayers before March 31
Close
Tail of AirAsia X plane as seen at the Garuda Maintenance Facility AeroAsia in Tangerang, Indonesia. (Reuters)
Tail of AirAsia X plane as seen at the Garuda Maintenance Facility AeroAsia in Tangerang, Indonesia. (Reuters)

AirAsia CEO says company may launch flying-taxi business in 2022

Bloomberg
PUBLISHED ON MAR 06, 2021 02:55 PM IST
With the airline business taking a hit from the coronavirus pandemic, AirAsia has been expanding in the digital space.
Close
Payrolls jumped by 379,000 last month, which was almost double expectations and pushed the unemployment rate down slightly to 6.2 percent, the Labor Department reported.(AFP file photo. Representative image)
Payrolls jumped by 379,000 last month, which was almost double expectations and pushed the unemployment rate down slightly to 6.2 percent, the Labor Department reported.(AFP file photo. Representative image)

Covid rescue plan clears hurdle as US economy shows gains

Posted by Harshit Sabarwal | AFP
PUBLISHED ON MAR 06, 2021 02:26 PM IST
Negotiations in the evenly divided Senate had frozen the chamber's action for some nine hours before the Democrats reached agreement with moderate Senator Joe Manchin, who had balked at the scale of the benefits.
Close
It was under his leadership that Muthoot Finance reached heights and also became the first NBFC to enter the ' <span class='webrupee'>₹</span>1000 crore net profit club'.(Muthoot Group)
It was under his leadership that Muthoot Finance reached heights and also became the first NBFC to enter the ' 1000 crore net profit club'.(Muthoot Group)

Muthoot Group chairman MG George passes away: All you need to know

By hindustantimes.com | Written by Deepali Sharma
PUBLISHED ON MAR 06, 2021 11:24 AM IST
Notably, George was one of the six people from the Malayalee background to have entered the Forbes Magazine's Rich list of 2020.
Close
The central bank in April had announced the government will issue Sovereign Gold Bonds (SGBs), part of the central government’s market-borrowing programme, in six tranches beginning April 20 till September.(Reuters)
The central bank in April had announced the government will issue Sovereign Gold Bonds (SGBs), part of the central government’s market-borrowing programme, in six tranches beginning April 20 till September.(Reuters)

A weak week for gold: Here's how the bullion fared

By hindustantimes.com | Written by Deepali Sharma, Hindustan Times, New Delhi
PUBLISHED ON MAR 06, 2021 11:17 AM IST
The continuous fall in the prices of gold allured Indian consumers to purchase more gold in physical form.
Close
In response to another question, Sitharaman said it was for the federal tax body, the GST Council, to take up this issue when it sees fit.
In response to another question, Sitharaman said it was for the federal tax body, the GST Council, to take up this issue when it sees fit.

Centre, states need to discuss fuel taxes, says Sitharaman

By Gireesh Chandra Prasad, Hindustan Times, New Delhi
PUBLISHED ON MAR 06, 2021 02:15 AM IST
  • In an interaction with members of the Indian Women’s Press Corps (IWPC), Sitharaman said that consumer sentiment about the tax burden on auto fuel was understandable.
Close
The Mukesh Ambani-led company expects to vaccinate around 900,000 people, including family members of employees, the company said.(Reuters representative image)
The Mukesh Ambani-led company expects to vaccinate around 900,000 people, including family members of employees, the company said.(Reuters representative image)

Reliance to bear the cost of covid shots for its staff

By Kalpana Pathak, Hindustan Times, Mumbai
PUBLISHED ON MAR 06, 2021 02:10 AM IST
  • Nearly 1.1 million vaccine doses were administered to people above the age of 60 and those in the 45-59 age group till Thursday.
Close
The Survey said a major challenge most firms face is the complex architecture of the governance framework, including the density of legislation and statutory compliances.(MINT_PRINT)
The Survey said a major challenge most firms face is the complex architecture of the governance framework, including the density of legislation and statutory compliances.(MINT_PRINT)

Govt plans to scrap 6,000 compliances

By Asit Ranjan Mishra, Hindustan Times, New Delhi
PUBLISHED ON MAR 06, 2021 02:04 AM IST
  • Mohapatra said the idea came during Modi’s meeting with Marriott International president and chief executive Arne Sorenson, who complained about the complex regulations in starting and running a hotel in India.
Close
Flush with liquidity and in tandem with Reserve Bank of India’s (RBI’s) repo rate cuts since March last year, banks have been lowering their lending rates.(Hemant Mishra/ Mint file photo)
Flush with liquidity and in tandem with Reserve Bank of India’s (RBI’s) repo rate cuts since March last year, banks have been lowering their lending rates.(Hemant Mishra/ Mint file photo)

ICICI cuts home loan rates to a decadal low

By Shayan Ghosh, Hindustan Times, Mumbai
PUBLISHED ON MAR 06, 2021 02:00 AM IST
  • ICICI Bank’s move comes days after rival lenders such as State Bank of India (SBI), Kotak Mahindra Bank and Housing Development Finance Corp. Ltd cut their home loan rates.
Close
Index funds and ETFs (exchange traded funds), which are passive in nature, will also be required to vote.(PTI File Photo)
Index funds and ETFs (exchange traded funds), which are passive in nature, will also be required to vote.(PTI File Photo)

Voting on corp resolutions compulsory for MFs: Sebi

By Neil Borate, Hindustan Times, Mumbai
PUBLISHED ON MAR 06, 2021 01:57 AM IST
  • These votes will have to be disclosed to unit holders under existing regulations. Voting will be at the MF level (rather than scheme level).
Close
Passenger vehicle manufacturers have been witnessing a sustained increase in retail sales on the back of improvement in economic activity and increased preference for personal mobility to avoid Covid infection.
Passenger vehicle manufacturers have been witnessing a sustained increase in retail sales on the back of improvement in economic activity and increased preference for personal mobility to avoid Covid infection.

Toyota SUV sales may skid on gaps in chipset supply

By Malyaban Ghosh, Hindustan Times, New Delhi
PUBLISHED ON MAR 06, 2021 01:55 AM IST
  • Supply of vehicles from Maruti Suzuki India Ltd—as part of the alliance with Suzuki Motor Corp—has helped Toyota increase its domestic market share in the premium hatchback and entry-level SUV segment, where it was not present before.
Close
ASI data is the most important source of industrial statistics of the registered organised manufacturing sector of the economy.(Reuters)
ASI data is the most important source of industrial statistics of the registered organised manufacturing sector of the economy.(Reuters)

Total factories in India grew by 2% in 2018-19

By Abhishek Jha, Hindustan Times, New Delhi
PUBLISHED ON MAR 06, 2021 01:51 AM IST
  • The top three states by GVA were Maharashtra, Gujarat, and Tamil Nadu. They had a share of 41% in the total GVA. Rural India added nearly as much GVA (49%) as urban India (51%).
Close
It is often believed that taxes on fuel affect the rich more than the poor, as the latter do not own vehicles.(Amal KS/ Hindustan Times)
It is often believed that taxes on fuel affect the rich more than the poor, as the latter do not own vehicles.(Amal KS/ Hindustan Times)

How do India’s fuel taxes impact the less affluent?

By Vineet Sachdev, Hindustan Times, New Delhi
UPDATED ON MAR 06, 2021 05:44 AM IST
  • Using average consumption shares to calculate the burden of an indirect tax has a problem.
Close
SHARE
Story Saved
OPEN APP