Terming the Reserve Bank of India’s (RBI’s) mid-term review of monetary policy as expected, Finance Minister P Chidambaram today said India would have to adopt unconventional measures to achieve the trinity of financial stability, price stability and sustained growth.
“The RBI will continue to deploy both conventional and unconventional tools,” Chidambaram told reporters here today, referring to a statement in this regard by the central bank. “We cannot rely only on conventional measures. We would have to adopt, if necessary, unconventional and unorthodox measures,” he said.
Since the RBI took several measures between October 6 and October 20 to ease liquidity, it left policy rates — including the repo, reverse repo, bank rate or the cash reserve ratio — unchanged today.
“It was along expected lines. However, the RBI said that it will continue to use the liquidity adjustment facility window flexibly. It has also said that it will infuse liquidity necessarily,” Chidambaram said.
“A monetary policy statement of the scheduled date is not the last word. The RBI has retained the flexibility to act swiftly if necessary and I am confident that it will act swiftly as and when necessary,” he said.
On RBI’s projection of 7.5-8 per cent economic growth this fiscal, Chidambaram said it was an important statement. “The RBI endorses our assessment that our financial system is strong and healthy and our economic fundamentals are strong. Calm will return to the world markets and once calm returns, we will get back to our higher growth trajectory,” he said.