Pranab Mukherjee wants RBI to tame inflation

Pranab Mukherjee wants RBI to tame inflationFinance Minister Pranab Mukherjee has suggested Reserve Bank of India to take strong steps on inflation. According to the recent reports, finance ministry wants RBI to keep a strict check on inflation.

Finance ministry's concern comes at a time when RBI is about to announce its mid-quarterly review of the monetary policy on March, 17. RBI has raised key policy rates 7 times in one year from March, 2010 to control inflation. Its efforts counted and finally inflation graph started showing a negative path recently.

But these efforts may prove futile because of increasing global inflation and sudden increase in crude oil prices in Middle East and North Africa, because of their local issues. Libya's ruler Gaddafi has not yet shown any sign of leaving the crown, which resulted in more uncertainty in crude prices. This has made it very unlikely that inflation rate will further decrease in coming months.

RBI governor D Subbarao recently suggested banks to increase deposit rates to encourage savings. Prior to this, while addressing RBI Board, Mukherjee promptly pointed need of keeping inflation under control simultaneously dealing with uncertain oil prices. RBI governor said about concern on inflation "This (keeping inflation in check) is essential for furthering the government's agenda on inclusive development".