RBI Governor D Subbarao strongly refuted all arguments that the central bank failed to control inflation and ended up stifling growth.
Subbarao said: “Core inflation has declined to around 2%. Yes, growth has moderated, but to attribute all of that moderation to tight monetary policy would be inaccurate, unfair, and importantly, misleading as a policy lesson. India’s economic activity slowed owing to a host of supply side constraints and governance issues, clearly beyond the purview of the Reserve Bank. If the Reserve Bank’s repo rate was the only factor inhibiting growth, growth should have responded to our rate cuts of 125 bps between April 2012 and May 2013, CRR cut of 200 bps and open market operations (OMOs) of Rs 1.5 trillion last year.” Read More