The Reserve Bank of India, which is scheduled to review the monetary policy on October 30, should not do anything that might make the economic fundamentals of the country uncomfortable, former RBI governor Bimal Jalan said on Tuesday.
"There is an inflow of funds and RBI has to reconcile different objectives... but nothing should be done to make things uncomfortable," Jalan told reporters on the sidelines of a conference on microfinance.
The central bank is facing a tough task of keeping the economic growth going while keeping inflationary pressures under control.
Foreign institutional investors have so far this year pumped over Rs 60,500 crore (Rs 605 billion) into the country's equity markets, which are on their peaks. The benchmark index is close to touching the 18,000-point mark while the National Stock Exchange's Nifty is over 5,000 points.
The record FII inflow has resulted in a sharp rise in the rupee against the US dollar. Rupee is trading below the Rs 40 a dollar mark, putting pressure on the margins of exporters.
Meanwhile, a slowdown in inflation -- 3.42 per cent for the week -- ended September 22, much below the RBI tolerance level of 5 per cent for the fiscal -- has been fueling expectations of a cut in interest rate by the central bank during its half-yearly monetary policy review on October 30.
Refusing to comment on whether RBI should go for interest rate cuts or maintain the status quo, Jalan quipped: "My days were much easier than the present governor."
