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The Prime Minister's Economic Advisory Council or PMEAC Chairman C. Rangarajan has voiced the need to control food inflation from the current 17% level to contain an upward spiral in manufacturing inflation.
Inaugurating the India-OECD symposium in New Delhi Thursday, the former Governor of Reserve Bank of India or RBI said: "Food prices must be controlled, otherwise they have a tendency to lead to manufacturing inflation, and suggested the central bank initiating monetary action, especially managing the money supply."
PEAMC earlier estimated the overall inflation level to hover around 6-6.5% during the current fiscal, but wanted to bring it down.
RBI Deputy Governor Usha Thorat said the apex bank would reassess its soft policy stance in the wake of soaring food prices. Going forward, the accommodative monetary stance will have to be reassessed, she added during her detailed economic and monetary data presentation.
On Dubai debt crisis, Thorat said it could obviously impact remittances and particularly affect those regions which received large inflows from the Gulf state. It would also not affect the country's banks, as their exposure is not significant and not a matter of concern.
Among the public sector banks that have some exposure in Dubai and corporates in the United Arab Emirates are Bank of Baroda and State Bank of India. The combined exposure is said to be about Rs.6,500 crore, she added.
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