The Hindu : Business : Inflation will be checked: FM

Online edition of India's National Newspaper
Wednesday, Jul 26, 2006

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Inflation will be checked: FM

Special Correspondent

Banks directed to maintain flow of funds to productive sectors

NEW DELHI: Finance Minister P. Chidambaram on Tuesday asserted that the steps taken by the Reserve Bank of India (RBI) in its credit policy review would put a check on the inflation rate and spur economic growth.

Endorsing the RBI policy initiatives, Mr. Chidambaram told newspersons that the economy was poised to post a robust growth. "The measures taken by [the] RBI Governor will curb inflationary expectations.

The Government broadly agrees with the assessment of the central bank,'' he said. The RBI's decision to increase the repo and the reverse repo rates by 25 basis points, Mr Chidambaram said, was aimed at curbing the inflation rate while noting that both fiscal and monetary measures were being deployed to keep a check on the price rise.

"In the current year, there has been pressure on prices of some foodgrains and of petrol and diesel," Mr Chidambaram said while hoping that they would soften in the course of time.

On the flow of credit to various sectors of the economy, Mr. Chidambaram revealed that he had directed chairmen and managing directors of various banks to ensure unhampered flow of funds to the major productive segments such as agriculture, industry and services.

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