Finance Minister P Chidambaram on Tuesday backed Reserve Bank's move to curb surplus money supply in the system, but hoped that economic growth would beat the central bank's projection of 8.5 per cent for this fiscal.
"RBI's mid-term monetary policy is a continuation of its policy announced last time, except that it has realised that there is excess liquidity and raised the requirement for banks to keep cash with the central bank by 0.5 per cent," he told reporters in New Delhi.
"I am sure that the banks will draw correct message from the policy. RBI has said we are ready to respond with short-term, medium-term and long-term
measures, if there are domestic or global developments," Chidambaram said.
Endorsing the RBI policy, he said the measures announced by it will be able to suck out the excess liquidity.
On real estate prices, he said there is some rise in real asset prices, but reports have said that it has moderated. "I still think they are still on the higher side."
Regarding RBI's economic growth projection, the finance minister said: "If RBI projects 8.5 per cent, I expect it to be slightly higher."
The Monetary and Credit Policy 2007-2008