Endorsing the Reserve Bank's stance on monetary policy that has kept interest rates intact, FM P Chidambaram said there is still no certainty that capital flows will increase.
NEW DELHI: Endorsing the Reserve Bank's stance on monetary policy that has kept interest rates intact, Finance Minister P Chidambaram on Tuesday said there is still no certainty that capital flows will increase due to rise in gap between India's interest rates and those in US.
Chidambaram also said that he would discuss with RBI Governor Y V Reddy about further steps to arrest capital inflows into the country.
He said there are no indications that India's economic growth rate will slow down.
To a query, he told reporters that the gap between interest rates in India and the US have indeed increased due to cut announced by that country's Federal Reserve.
However, there is no surety that capital flows would increase due to the US central bank's move, he said.
"We do not know. We don't know what will happen yet. As I've said (the) cat can jump either way. There could be increased capital flows, but there are payment obligations in those countries and there could be outflow of capital," he said.
He said the RBI Governor would come to Delhi soon. "We will discuss with the RBI, what further measures could be taken to contain capital flows," he said.
Chidambaram further said, "I endorse (RBI's) approach. The governor has reinforced price stability, emphasised credit quality and credit delivery, particularly to the employment intensive sectors."
To a query on RBI's Industrial Outlook Survey indicating some moderation in the business confidence, the Finance Minister said there is no reason to believe that there is a slow down in India's economic growth.
He said non-food credit growth has indeed decelerated, but that was the purpose of RBI's previous policies. However, growth in money supply and aggregate deposits of Scheduled commercial banks still continue to be high.
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