Reserve Bank of India said on Friday it would intervene if inflation does not decline to central banks targeted level by March 2011.Inflation may come down to RBIs projections, if it does not we will have to take steps, RBI deputy governor K C Chakrabarty said on the sidelines of an event organised by Confederation of Indian Industry and Suresh Neotia Centre of Excellence.
We are already exiting from the accommodative policy.
While we are exiting, inflation also has to come down. Accommodative policies continue where the growth is very low.
Our growth is reasonable. If the inflation does not come down you will have to take the step, he told reporters.
Chakrabarty expressed concern over meeting the government target for long term double digit growth.
At present there is no sign of overheating but we will not be able to grow at 9 per cent (on the long term) with this kind of infrastructure or this level of investment
in agriculture, Chakrabarty said.
"The problem is in the long term. On a longer term we can grow by 7.75-8 but not at 9-10 per cent with this kind of infrastructure unless we do something additional."
Speaking on liquidity, he did not see any problems on that front as of now. It is partly structural and partly frictional.
Plenty of money is available. RBI has given support, he said.
Asked about capital inflows, Chakrabarty said until now capital inflows have not been a big concern but as when it will become a concern, 'we will have share the pain'.
So far there is no pain as current account deficit is about three per cent and that has to be supported, he added.
