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Updated: October 31, 2012 02:59 IST

We will ‘walk alone’ if need be: Chidambaram

Ashok Dasgupta
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Finance Minister P. Chidambaram was apparently upset over RBI’s decision to leave interest rates unchanged.
PTI Finance Minister P. Chidambaram was apparently upset over RBI’s decision to leave interest rates unchanged.

Keeping key policy repo rate unchanged, RBI has belied his expectations

That Reserve Bank of India Governor D. Subbarao and Finance Minister P. Chidambaram are not on the same page on the growth-inflation dynamic has been known for months now. But the sharp differences in perception came to the fore on Tuesday when the RBI, despite the government’s fiscal consolidation road map unveiled a day before, chose to keep the key policy repo rate unchanged in view of high inflation and Mr. Chidambaram decided to “walk alone” to face the challenge of growth.

“Growth is as much a challenge as inflation. If the government has to walk alone to face the challenge of growth, then we will walk alone,” said an apparently upset Finance Minister in his comments to the apex bank’s second quarter policy review, an event that both India Inc. and the markets had been eagerly looking forward to, for its announcement on easing interest rates to boost investor sentiments and spur growth.

At his press conference on Monday to unveil the five-year fiscal consolidation plan marking acceptance of the Kelkar Committee recommendations, Mr. Chidambaram made it abundantly clear that he would like to see reciprocal action on the part of the RBI by easing interest rates and working in tandem with the government to push growth.

“Well, I am making the statement so that everybody in India acknowledges the steps which we are taking. And also acknowledges the government is determined to bring about fiscal consolidation. And I sincerely hope that everybody will read the statement and take note of that...” he had said when queried on the timing of his announcement.

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Whenever i see this PC, reminds of how the bench of G S Singhvi and Radhakrishnan
jumped to some conclusion to save him. speaks a volume about PC clout and SC
understanding of law. Sad development that PC is talking economics.

from:  nirguna
Posted on: Oct 31, 2012 at 09:22 IST

This Government is driven by corporate people to protect their
interests. After Jaipal Reddy's turn to be knocked out of his portfolio
as Petroleum and Natural Gas. I think it is Duvvuru Subba Rao, RBI
Governor of India's turn to be replaced by the people who will protect
the interest's of Government(so called) and their Corporate gaints.

from:  Srinivas Rao Chowdavarapu
Posted on: Oct 31, 2012 at 08:49 IST

Chidambaramji,Consider introducing a short term stimulus that will
provide relief to individual borrowers in the housing, two wheelers,
cars and Tractor sectors. Though it will have an impact on the
deficit,it will hasten the pace and help in achieving a higher GDP
growth at the end of fiscal year.You have a super team that includes the
famed economist Raghuram Rajan.You will be able to work wonders.

from:  Kousalya Murali
Posted on: Oct 31, 2012 at 08:39 IST

Is it difficult for the RBI chief & FM, supported their respective
experts, sit, talk and agree on solutions.
From experience, I think India has been saved by wise RBI, not by
political animal FMs. I am sorry.

from:  V.Muthuswami
Posted on: Oct 31, 2012 at 08:24 IST

Chidambaram cannot be as brazen as that. This is the problem with the arrogant UPA. The RBI is INDEPENDENT of government, like the MPC in the UK. That is the only way to maintain a balance in the economy. If the RBI thinks that dropping the interest rate will affect inflation to an unacceptable level, then one has to go along with that.

from:  Samir Mody
Posted on: Oct 31, 2012 at 08:14 IST

PC can fool IAC, Anna Hazare, Bab Ramdev, but not RBI. Subbarao has done good job, now FM should do his work instead of giving press statements.

from:  M V Chilukuri
Posted on: Oct 31, 2012 at 07:54 IST

Mr PC you want a institution like RBI to Work in tandem to loot for your
guys in the name of country's growth? How will trust your crocodile
tears for india's growth!

from:  Nariman
Posted on: Oct 31, 2012 at 07:34 IST

What nonsense : interest rate has direct relationship with inflation and anyone with basic economics education will know that. However the problem of growth in India is not related to interest rate but to lack of infrastructure investment and lack of confidence by the investors. Lack of confidence is due to corruption and policy backflips and retrospective silly taxes while lack of infrsturucture is due to lack of investment for the same reason. remove these obstacles by developing transperant investment approval system and company tax system then there will be investment and growth will happen. Of course inflation will happen but that will be due to productivitiy not just circulation of welfare money as it is now. It is high time govt concentrated on these issues and not drag RBI to do things which it should not be doing.

from:  svnagappa
Posted on: Oct 31, 2012 at 07:17 IST

The government of India, the reserve bank of India, and also the planning commission will
Have to think on the same wave length for the countries growth. The nation expects growth
At all levels, with a check on inflation, to help the entire populace. There has been growth
And the percentage of growth will be higher if the different wings reveal harmony, AND
NOT DISCORD. The honble minister has created an impact in India in different roles during
the past several years and one hopes that he will march TOGETHER and NOT ALONE in
the larger interests of India.

from:  C.p.Chandra das
Posted on: Oct 31, 2012 at 07:03 IST

I am generally against the RBI cutting rates until the government shows a greater commitment to keeping the fiscal deficit in check. However, in this case I support the finance minister. Mr. Chidambaram's appointment coupled with a slew of reforms shows the government's commitment to economic growth and the RBI must help the government in this case. But yes, I do acknowledge the RBI's worry that the govt might succumb to populism due to approaching elections and go on a spending spree again causing high inflation.

from:  Anuj Shah
Posted on: Oct 31, 2012 at 06:49 IST

This Chidambaram who manipulated his way to get elected(by hook and
crook)is stage managing things to benefit the Corporate sector which is
controlled by a very few at the expense of the vast vast majority. In
short, he is a cheat like chandrababu and both are friends. You can
understand chidambaram by the company he keeps.He has scant regard for
democracy, people etc.People are getting ready to show him, his company
and his party their due place. Investigations must be held into his anti
people ways and taken to task.

from:  K Joshi
Posted on: Oct 31, 2012 at 06:29 IST

Inflation affects both the rich and the poor while the rewards of economic growth go
directly and largely only to the rich. From what he is reported to have said as per the
above report, one can understand where the heart of the Finance Minister lies.
Mr.Chidambaram, do not forget that it is largely the poor people of the country who
have voted for you and your party. Also do not overlook the possibility that they may
not do so in 2014.

from:  K.Vijayakumar
Posted on: Oct 31, 2012 at 04:16 IST

It is a known fact that spurring growth through reducing interest rates is a questionable approach. I applaud the independence of RBI.
India should focus on creating jobs and reducing "institutionalized corruption". Growth will follow.

from:  S Dhara
Posted on: Oct 31, 2012 at 03:58 IST

Absolutely right approach. In fact rate of interest has no relation to inflation or GDP growth at all, only a political ploy to fool people.

from:  satsangi a c
Posted on: Oct 30, 2012 at 16:58 IST
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