The Reserve Bank of India (RBI) said on Friday it had no magic wand to bring down the inflation rate.
?You all want that inflation should come down. Neither the finance ministry nor the Reserve Bank has any magic wand to bring down inflation,? RBI deputy governor KC Chakrabarty said at an Assocham seminar on Friday.
He said supply-side measures that improve farm productivity would help in combating price rise. Inflation has hovered near 9% despite the RBI steeply hiking policy rates ten times since March 2010. Inflation rose faster than expected to 9.06% in May from 8.66% in April.
?Instead of saying that the RBI should bring down inflation, we must increase productivity and bring down the cost of services and that will only bring down inflation. Otherwise, it will not come down,? Chakrabarty said.
Chakrabarty said with India?s GDP at current market prices during 2010-11 already placed at around $1.7 trillion, it was expected that the Indian economy would cross the $3.4-trillion mark by 2015-16, well within the span of the ensuing Five-Year Plan.