Controlling inflation our prime duty: RBI Governor D Subbarao

RBI Governor D Subbarao recently said that reducing inflation is his priority now and will remain so in future. With the RBI’s monetary policy up for review on January 29, Subbarao’s statement assumes significance. Addressing a crowd of villagers and state government officials at village Lalpur Karauta in Barabanki district during an RBI outreach program, Subbarao said controlling inflation is our prime duty.

In the last few years, inflation has increased a lot. All items, especially, food and clothes have become very expensive. Inflation has affected everybody, but it has hurt poor the most. We have been able to control inflation during the last two years but I recognise the fact that it continues to be high. Reducing inflation is our priority and will always be. Only then can the poor be given relief.

With the headline inflation dropping to a three-year low, according to data released a few days ago, expectations of a rate cut in the policy review by RBI has heightened. Subbarao, however, refrained from answering questions about the monetary policy review. He said that Uttar Pradesh had a very low Credit Deposit Ratio of about 47%. He said that while deposits were mobilised in the state they were deployed outside UP.

The governor said that a state like UP should have a better CD ratio. He said that while bankers say that UP does not have appetite for more credit government, officials say that there is a huge demand for credit.

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