India has come out unscathed by the global financial crisis, but walks a tightrope in its policies as it balances growth with stability, Reserve Bank Governor Duvvuri Subbarao said on Thursday. The crisis has underlined the world in which nations are linked in a web, he said.
“We need to take measured and timely action and make a balanced judgement—not to be too benign, but also not go overboard with excessive or premature tightening (of money supply),” Duvvuri Subbarao told a conference of the Indian Banks Association in partnership with industry chamber FICCI on global banking.
Subbarao said coordination between the world’s central banks was key to ensure a smooth exit made from policies crafted to ease recessionary pressures.
“Coordination is like a win-lose game and therefore as a country if I ease my policies I need other countries to also do the same or I lose out,” he said. He said he could not put a time-frame for India’s exit from its current policy stance, but it would have to be sooner than other central banks.
“We have to make a judgement call taking all factors into consideration, however we will have to exit sooner as inflationary pressures build up,” Subbarao said.
{{/usCountry}}“We have to make a judgement call taking all factors into consideration, however we will have to exit sooner as inflationary pressures build up,” Subbarao said.
{{/usCountry}}He said central bankers needed to measure stability, choose the right regulatory model and maintain a balance between fiscal stability and central bank independence.“We will not slow down on reforms, but will surely rework the road map to reflect the lessons of the crisis,” he said.