The inflation tolerance level in India is low relative to many developing countries because of democratic pressures, Dr Y V Reddy, Governor, Reserve Bank of India (RBI) said today.The headline inflation between January-March 2007 has remained above 6% touching 6.46% for the week ended March 10, 2007, but the average inflation was 5.3% between April 2006-March 10, 2007. "It needs to be recognised that historically the tolerance of inflation has been low in India due to democratic pressures," Reddy said in his address at the Bank of Greece in Athens today."In a broad sense, the objectives of monetary policy can be no different from the overall objectives of economic policy. The broad objectives of monetary policy in India have been to maintain a reasonable degree of price stability and to help accelerate the rate of economic growth. The emphasis between the two objectives has changed from year to year depending on the conditions prevailing in that year and in the previous year," he added.
