Apex finance panel agrees with RBI rate hike
July 27th, 2011 - 8:54 pm ICT by IANS
New Delhi, July 27 (IANS) An apex panel of financial sector regulators, headed by Finance Minister Pranab Mukherjeee, Wednesday agreed with the latest Reserve Bank of India’s (RBI) rate hike and said tackling inflation was necessary.
“The general consensus was that while inflation may not be conducive to short-term economic growth, India’s medium to long-term economic growth prospects remain bright,” said a note from the finance ministry after the meeting of the Financial Stability and Development Council (FSDC).
“In the short-term, it is necessary to tackle inflation,” it added.
The Reserve Bank of India hiked the repo rate by an unexpected 50 basis points, resulting in an outcry from corporate India.
The FSDC comprises of the RBI governor, the finance secretary, chairman of Securities and Exchange Board of India (SEBI), chairman of the Insurance Regulatory and Development Authority (IRDA), chairman of the Pension Fund Regulatory and Development Authority(PFRDA), and other senior officers of the finance ministry.
The council said that the levels of investments as a percentage of the gross domestic product (GDP) was encouraging.
“This should help growth prospects of the nation. The provisional tax collection figures for the first quarter of current fiscal are also encouraging and they give reason for optimism on growth and meeting the fiscal targets,” the FSDC said.
The government is targeting a growth of 8-8.5 percent this fiscal and a fiscal deficit of 4.6 percent of the GDP.
However, analysts and even the RBI are doubtful that the government will be able to achieve any of these targets.
- Financial oversight body by December: Minister - Nov 23, 2010
- Monetary tightening may moderate growth: Mukherjee - Jun 17, 2011
- Growth may moderate, inflation a major challenge: Pranab (Lead) - Jun 17, 2011
- High energy prices will hamper growth: Mukherjee - May 03, 2011
- Inflation forces India's central bank to hike rates again (Roundup) - May 03, 2011
- RBI may hike rates again if inflation remains high: Pranab - Jul 27, 2011
- Inflation forces another rate hike by India's central bank (Second Lead) - May 03, 2011
- Rate hikes not curbing inflation, only hampering growth: Industry - Sep 16, 2011
- Rate hike will bring down inflation to 6 percent: Pranab - Jul 26, 2011
- Rate hike will hurt growth, feels India Inc - Jul 26, 2011
- Economists divided on impact of rate hikes on India's growth - Sep 20, 2011
- After petrol prices, higher interest rates set to bite - Sep 16, 2011
- Rate cut will stimulate growth: Montek - Apr 17, 2012
- Pranab Mukherjee holds first FSDC meet - Dec 31, 2010
- With inflation easing, India's central bank halts rate hikes (Roundup) - Dec 16, 2011
Tags: bank of india, basis points, corporate india, exchange board, finance minister, finance ministry, finance panel, finance secretary, fiscal deficit, fiscal targets, fsdc, growth prospects, insurance regulatory and development authority, pfrda, provisional tax, rate hike, rbi governor, repo rate, reserve bank of india, securities and exchange board of india