Countrys economy is responding well, says Mukherjee

Union Finance Minister Pranab Mukherjee said on Tuesday that the countrys economy is responding well.

New Delhi, Oct 27 : Union Finance Minister Pranab Mukherjee said on Tuesday that the country's economy is responding well.

Addressing the media here, Mukherjee said: "The economy, I would like to say is responding well, the policy statement which we have initiated, the Reserve Bank of India (RBI) and Finance Ministry are working in close co-operation and this will continue for future."

He noted that the economy was likely to expand in the range of 6.5 to 6.75 percent during the fiscal year ending March 2010.

Mukherjee further elaborated that the easy monetary policy is likely to continue until economic recovery is firm after the RBI started the first phase of its exit from easy policy but held rates steady.

Earlier in the day, the RBI laid the groundwork for a rise in interest rates by tightening credit to the commercial property sector, lifting its inflation forecast and warning of the threat of asset price bubbles.

The RBI left key interest rates on hold but surprised markets by removing emergency liquidity support measures that were implemented to protect Asia's third-largest economy from the global downturn.

Mukherjee also informed that the government took essential measures to tackle the adverse impact of inflationary pressure.

"In respect of the inflationary pressure I can tell you that we have taken major steps to ensure that the adverse impact of inflationary pressure is reduced by strengthening the supply management," he said

"Commodities of short supply are imported though there is likely to be shortfall of Kharif crops but the existing stock is sufficient. There would be no shortage of food grains," Mukherjee added.

ANI