Rajan Meets Jaitley, Says RBI Will Continue to Balance Growth, Inflation

Reserve Bank of India Governor Raghuram Rajan on Tuesday met Arun Jaitely hours after he took charge as the new finance minister. Dr Rajan said he discussed a range of issues with the finance minister.

The meeting comes days before the bi-monthly monetary policy review on June 3 and lasted for about 50 minutes.

After the meeting, Dr Rajan said the central bank has always balanced GDP-inflation and will continue to do so. Earlier in the day, Mr Jaitley had said that a "balancing act" will have to done when asked whether the new government would focus on inflation at the cost of growth. (Read the full story here)

In the past, Dr Rajan has been criticised by some members of the BJP for the series of interest rate hikes to curb inflation. The RBI wants to bring down consumer price inflation to around 6 per cent by January 2016, which would probably mean more interest rate increases. The central bank has already raised rates thrice since September.

Dr Rajan took charge of the central bank in September 2013, when the country faced a currency crisis. Since then, the rupee has gained nearly 15 per cent. India's current account deficit, which hit a record low last year, has also narrowed sharply and in the March quarter, it fell to a five-year low.

 "Yesterday's number was very healthy," the governor said. When asked about easing of curbs on gold imports, he said: "You will see policies as they are rolled out".

Dr Rajan, a former International Monetary Fund chief economist is widely viewed as India's most capable technocrat. Before moving to the RBI, Dr Rajan, 51, served as chief economic adviser to the finance ministry under the Congress party-led government.

(With agency inputs)