Inflation still a concern: Raghuram Rajan

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Mumbai: RBI Governor Raghuram Rajan on Wednesday said that Inflation is still a concern for RBI and the monetary policy continues to be ‘conventional’

Rajan said, “We still have concerns over inflation. So, given the deflationary environment elsewhere, it is actually easier for us because we are not fighting inflation in an environment where inflation is picking up elsewhere. I think we are still in conventional monetary policy territory.”

Rajan chose to keep the interest rate unchanged for the seventh time out of the 11 monetary policy decisions announced under his regime so far.

December data indicated a rise in the inflation to 5 percent from 4.38 per cent in the preceding month. Rajan on Wednesday clarified that the mid policy action was also to satisfy the concers of some people who were calling RBI’s policy formulation ‘tardy’.

The savings rate came to 30 percent low and to increase it Rajan advocated for the increase in the tax benefit for small investments in financial instruments like PPF, PF, insurance policies etc.

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