The Reserve Bank of India (RBI) will study the demand pattern of food and look into the causes behind the rise in food prices, Subir Gokarn, the central bank's deputy governor, said today. "We are studying what is causing food inflation, and a report will be submitted shortly," Gokarn told reporters on the sidelines of the ICC Banking Summit here.
Gokarn said that there have been certain structural changes in the demand pattern of food. "There is a need to understand whether it is a long-term phenomenon, or a monsoon-based short-term one," he said.
Stating that the fundamental issue lay in identifying the long-term and short-term factors, he said it was important to diversify into other nutritional sources too. According to Gokarn, rising food prices were becoming a part of the inflationary equation.
The RBI was studying the consumption pattern of food items like pulses, milk and sugar in this context, he added.
Speaking on the impact of the Greek crisis on the Indian economy, he said there would clearly be "some nervousness in the widening of global exposures" and this stands to influence capital flows into emerging economies of the world.
"Stronger performing economies may see capital inflows because there may not be many countries where money can go," he said, adding that there would definitely be some short-term volatility.
On liquidity of the system, he said that the RBI had factored the government's borrowings programme in the budget, as announced. Gokarn said that the credit offtake in the banking system was also factored in by the apex bank.
"Keeping these issues in mind, there will be no significant impact on the economy's liquidity," Gokarn said.
