New Delhi, Aug 6 (PTI): Finance Minister P Chidambaram on Monday said the government would work with the Reserve Bank of India to control both inflation and interest rates, to stimulate investment and ease burden on consumers.
Underscoring price stability, he said the government would use its food grain stocks to moderate prices and enhance imports of essential commodities.
At his first media briefing after taking charge of the Finance Ministry, Chidambaram said fiscal and monetary policies must point to the same direction to moderate inflation.
“The government will work with the Reserve Bank of India to ensure that inflation is moderated in the medium term,” he said.
“(Also) high interest rates inhibit the investors and are a burden on every class of borrowers, be it a manufacturer or a purchaser of home or two-wheeler or a student who takes an education loan,” he said.
The Finance Minister, who met RBI Governor D Subbarao on Monday morning, said “sometimes it is necessary to take carefully calibrated risks in order to stimulate investment and to ease the burden on consumers. We will take appropriate steps in this regard”.
Subbarao has been maintaining that the inflation needs to remain the top priority for the RBI. The central bank did not reduce the benchmark interest rates in its first quarter credit policy review despite pressure from the industry.
The wholesale inflation in June was 7.25 per cent, while at the retail level it was 10.02 per cent.
Industrial production recorded a dismal growth of 2.4 per cent in May and the overall economic growth slowed to nine-year low of 6.5 per cent in 2011-12.
In the backdrop of monsoon deficiency, Planning Commission Deputy Chairman Montek Singh Ahluwalia has lowered the economic growth projections to about six per cent in 2012-13.