The top priority of Reserve Bank of India is tackling high inflation, Subir Gokarn, deputy governor of the central bank told CNBC.
Interest rate cuts can bring rebound in economic activity, but the central bank is dealing with a relatively uncomfortable inflationary situation, he said in an interview. The inflation objective cannot be abandoned.
The RBI maintained its interest rate last month as lowering policy rates in the current situation will aggravate inflationary impulses without necessarily stimulating growth.
In July, the central bank lifted the projection for WPI inflation for March 2013 to 7 percent from 6.5 percent.
Gokarn said the economy expanded 2003 and 2008 at close to 9 percent as policy measures addressed many of the bottlenecks. India has to re-enter that phase again.
According to him, the cost of not acting is becoming more visible. It is the responsibility of the government to do more to support growth, he added.
by RTT Staff Writer
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