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Curbing inflation sans growth sacrifice not possible: RBI
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SME Times News Bureau | 15 Jun, 2012
Reserve Bank of India (RBI) governor D. Subbarao Thursday said inflation can't be controlled without sacrificing some growth.
Delivering
the Obayya memorial lecture here, he said that a short-term sacrifice
of growth was a small price to pay for bringing down inflation so that
in the medium term, the growth is secured.
"You cannot control
inflation without sacrificing some growth. After all, you have to
contain demand. When you contain demand, growth comes down. So there is
no way of bringing down inflation without sacrificing some growth," he
said.
Subbarao did not believe that India is heading for
1991-like crisis. "It is highly improbable that we will have 1991-type
crisis because today we have different set of economy," he said.
He
said while fiscal deficit was as high as it was in 1991 while the
current account deficit was going to be higher than that of 1991, the
twin deficits would not lead to that situation. He pointed out that
rupee was over valued in 1991.
"Today exchange rate is market
determined which is a great strength, the country has $285 billion
foreign exchange reserves,? he said.
The RBI governor said the
while India today has $2 trillion dollar economy, it was only $200
billion in 1991. "Financial markets are resilient, robust and more
sophisticated while in 1991, we had no financial markets to speak of."
He, however, clarified that he was not saying that there were no problems.
"There
is nothing inevitable about Indian growth story. It is a great story.
It is a credible story. The fundamentals of Indian economy are still
strong but at the same time it is not inevitable. There is no god given
law that India has to grow at 10 percent or 12 percent. It is the
responsibility of not just RBI and the government but it is the
responsibility of every one concerned," he said.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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