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  • Abnormal rate hikes will impact investments, jobs: Pranab

    Published on August 5, 2010

    Finance Minister Pranab Mukherjee on Wednesday supported the gradual approach adopted by the Reserve Bank for tightening monetary policy, saying abrupt rate hikes would scuttle the growth and job scenario.

    “If the interest rates are hiked abnormally, naturally there will be no investment, there will be no growth, there will be no job creation,” Mukherjee said in the Lok Sabha during the debate on government action on inflation.

    Mukherjee said the Reserve Bank of India continuously monitors the liquidity situation and reviews its monetary policy from time-to-time. It recently hiked its policy rates. This was the fourth hike in the current calendar year.

    “The appropriate monetary policy is mopping up the excess liquidity,” Mukherjee said, adding, “Gradually we are rolling out” the excess liquidity, fiscal expansion and stimulus provided during the financial crisis.

    He said if he was allowed to compromise on growth and exports, or if he could fix prices of goods as done in some countries, where goods were available only in the black market, “I can surely control the inflation.”

    However, he stressed, “That type of situation we do not want. We want food to be available, producers must have the remunerative price, economy must grow.”