RBI may raise rates to curb inflation: Mukherjee

NEW DELHI - Finance minister Pranab Mukherjee Monday hinted that The Reserve Bank of India (RBI) may increase key interest rates further to contain inflation.

“RBI monitory policy will be announced soon. I had a discussion with the RBI (Reserve Bank of India) governor. He may may take the necessary step,” Mukherjee told reporters on the sidelines of a conference of state finance secretaries.

The RBI reviews its monetary policy for this fiscal Tuesday with high food inflation in the backdrop, even as industry and commercial banks hoped for status quo in policy rates, already tweaked five times in 2010.

The finance minister said though inflation remained a big concern, he expected it to come down to acceptable levels soon and urged state governments to help curb inflation.

The overall annual inflation rate has fallen in recent months, but was still at a higher level of 8.62 percent as recorded in September. The 52-week rise in food prices is also in double-digits at 13.75 percent for the week ended Oct 16.

On the state of the economy this fiscal, Mukherjee said the country was back on a robust 9 percent growth path, while the fiscal deficit had remained at estimated levels.

“This year the fiscal deficit will not exceed 5.5 percent of GDP (gross domestic product) as estimated in the budget,” he said, adding that the total debt stock would come down to 48.2 percent of GDP in the current fiscal.

He urged state governments to reduce their debt through fiscal consolidation.