An agreement between the Centre and the Reserve Bank of India last month formalised a policy that the central bank had been following since January 2014, of prioritizing controlling price rise.
“In case, factors beyond the control of the Reserve Bank such as fiscal irresponsibility of the Centre or constraints in supplies of goods and services are stoking inflation, it (RBI) could hike interest rates to meet the target set,” Finance Secretary Rajiv Mehrishi told reporters on Monday. The Centre would amend the RBI Act for the setting up of the proposed monetary policy committee, a key element of the new framework.
Replying to a query, Mr. Mehrishi said the budget announcement about proposed ‘strategic disinvestment’ in public sector units would enable the Centre to induct private strategic partners.
ADVERTISEMENT
Chief Economic Adviser Arvind Subramanian said the momentum of inflation in consumer prices of food for January was slower than that for overall inflation, reflecting the slippage in the growth rate of rural wages.