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RBI Governor calls for inflation to be curbed to boost growth

May 19, 2011 - Agartala

Expressing concern over the rate of inflation in the country, Reserve Bank of India (RBI) Governor Duvvuri Subbarao has said that it needed to be curbed to achieve growth targets.

Subbarao said curbing the rising inflation is essential to protect the poor so as to provide them with a decent livelihood.

"We are concerned about the level of inflation. It has of course come down from the high levels that were in April 2010 but it is still high and we need to bring it down. We need to bring it down because in a poor country like us, with hundreds and millions of poor people, low inflation is a necessary condition for decent livelihood," said Subbarao, while speaking at an event in Agartala on Thursday.

"Inflation hurts the poor the most. So, we need to bring down inflation to protect the poor and to improve the quality of life. Indeed, we need to bring down the inflation in order to see that our growth is accelerated," he added.

Subbarao further said the Central Government and the banks needed to cover 5,70,000 habitations, which do not have access to banks across the country.

"There are 600,000 habitations in the country and off that only about 30,000 have access to banks. Remaining 5,70,000, which is 95 percent of the habitation in the country do not have access to banks," said Subbarao.

"Both the Government and the Reserve Bank have determined that by March 2012 all the villages in the country with the population of 2,000 and above will be covered with bank branches," he added.

Rising inflation has forced RBI to hike key interest rates by 50 basis points in the recent past.

India's headline inflation rose to 9 percent on an annual basis in March despite the central bank's tightening of key bank rates.

The rise exceeded forecasts by 25 basis points. However, the case for stronger action has been building since data showed in March that inflation reached nearly 9 percent.


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