explained the actions taken in the third quarterly monetary policy review at a media briefing on Tuesday: Domestic factors dominate policy stance
The macro-economic developments in the Indian economy, by and large, have been on expected lines and there is some continuing pressure on inflation.
Therefore, the same stance continues. There have been dramatic developments in the global situation and there have been heightened global uncertainties, something which we had anticipated and planned.
But the situation is so complex that it will be inappropriate to jump to a conclusion as to what is happening there and start moving in some direction and getting oneself locked in that direction.
So, on balance, we felt that it is far better that substantively we continue with the stance which is most relevant for the domestic economy because the domestic economy considerations dominate.
Growth of 8.5 per cent and inflation of 4 per cent in January 2009
Given the lagged effects, we should perhaps look at what are the positions with regard to January 2007, what is the position in January 2008 and what do we want to see in January 2009. So that is one way of looking at it.
If we see in January 2007, the growth was very strong around 9 per cent, but inflation was 6 per cent and that was a major issue. We had to concentrate on rebalancing the whole situation of supply and demand factors.
In January 2008, we have arrived at 8.5 per cent reasonably comfortably. Inflation has been brought down to below 5 per cent, which is more or less what we wanted. And what do we want in 2009 is something which we have to keep in view.
In 2009 also, after recognising the possible uncertainties in the global situation, we should aim for at least 8.5 per cent growth, if not more.
Trade-off between growth and inflation
Let us go to the global sentiments in global situation. Global growth was very strong in January 2007 and today in January 2008, some countries are definitely thinking of and their policies centre around possible recession.
The projections are showing slight moderation in the global growth. In 2009, I think on global growth, it is nobody
