P. Chidambaram, Union Minister of Finance addressed the Central Board of the Reserve Bank of India today. He indicated that the Interim Union Budget 2014-15 had been presented against the backdrop of considerable improvement in the macroeconomic environment with the fiscal and current account deficits being contained during financial year 2013-14. This was made possible by effective macro-economic management which included unconventional and difficult measures, and close coordination between the Government and RBI.
The RBI has agreed to the proposal that the right to decide on an inflation target for the economy will become the government’s mandate and that the central bank would focus on achieving it, Chidambaram said while addressing a joint press conference with governor Raghuram Rajan.
"I am glad that the measures taken by the RBI and measures taken by the government are complementing each other" he added.
Chidambaram said that the government will achieve the fiscal deficit target of 4.6% in FY14 and the economy is more stable than it was 18 months ago. "The current account deficit (CAD) will be contained below $40 billion.
The RBI will take appropriate decisions on bank licences, Chidambaram added.
Dr. Raghuram Rajan, Governor, RBI chaired the meeting. “The RBI is also obviously worried about growth and inflation. The question is how we go about achieving high growth with low inflation,” Rajan said.
Rajan stressed that low inflation is a must to achieve sustainable growth and that central banks cannot pursue either single mindedly.
Rajan said that while it is believed that the RBI announcing new bank licences should not violate the model code of electoral conduct that has come into force, he would still seek a formal approval from the Election Commission. “If all goes well, we should be able to do it in a few weeks.”
The Finance Minister was addressing the customary meeting of the Central Board of RBI after the presentation of the Interim Budget. He was accompanied by Namo Narain Meena, Minister of State (Expenditure and Financial Services) and Jesudas Saleem, Minister of State (Revenue).Special invitees Sumit Bose, Secretary (Finance) and Ratan Watal, Secretary (Expenditure) attended the meeting.
Besides Deputy Governors Dr KC Chakrabarty, Harun Khan and Dr. Urjit Patel of RBI, the other directors of the Central Board of RBI were also present in the meeting.
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