Reserve Bank of India (RBI) Governor Raghuram Rajan on Thursday said that he was determined to ease consumer inflation through a combination of demand and supply management.
An RBI panel in January recommended bringing consumer price index (CPI) inflation down to around eight percent by the end of January 2015 and to six percent by the end of the following year.
Rajan said the RBI has been working for combating inflation through a combination of supply and demand management.
"Through a combination of demand management, which the RBI is engaged in, and supply management, which the government has announced a number of measures and I presume as we go along depending on the situation we will announce some more. On the supply management the biggest source of the supply management is food prices which the government has paid a lot of attention to in the last few quarters. And I think second aspect is getting some of the projects which are stalled going that will help increase supply of things other than food," said Rajan.
Rajan also noted that the RBI would issue circulars regarding banks' lending for infrastructure projects. India expects some stability in oil price despite external shock arising from the Iraq crisis.
Rajan also assured stability in oil price. "We import a lot of oil; we also export a lot of oil, oil products. But clearly if there was substantial turmoil in the Middle East and for example the oil fields in Iraq were threatened, there would be a lot of volatility in the oil price which would be harmful for us. At the same time I think as we speak, oil prices have come down substantially from 115 dollars a barrel. And we can hope for at least some stability in the oil price even while there is an unfortunate conflict going on in Iraq," he said.
