Hyderabad, 2 August: The Reserve Bank of India governor Mr D Subbarao today argued in favour of "growth" that does not exclude the poor while affirming that the restrictions imposed on futures market would stay till there is stability in the foreign exchange market since "undue volatility" was adversely affecting growth.
The RBI governor who has been under fire for sacrificing growth in order to rein in inflation, seemed to be responding to criticism while stressing on "poverty sensitive growth" in which the poor contribute or benefit from it.
Only yesterday, Mr Subbarao had defended the RBI’s role saying that inflation hurt the poor more and they usually do not have a voice. It may be mentioned that the Union finance minister, Mr P Chidambaram has also been critical of the central bank governor, who is set to retire next month, for keeping interest rates high.
Delivering the keynote address at the Institute for Development and Research in Banking Technology (IDRBT) Excellence Awards Function Mr Subbarao said: "Growth is a necessary although not a sufficient condition for equity. To achieve equity we need growth that is poverty sensitive ~ that is growth to which poor contribute and growth from which the poor benefit."
He added that the "financial sector does not necessarily reach out to the bottom of the pyramid."
The economy is going through its worst crisis with growth slumping to a decade low and the Indian rupee trading at a record low.
But the Reserve Bank governor, with price stability as his priority, has been firm in his approach aimed primarily at curbing inflation. It has shown some results since the Wholesale Price Index, or WPI, which was in double digits earlier, has now fallen to just about 4 per cent. Mr Chidambaram had said the mandate of a central bank must not only be price stability. SNS