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"The message is already there that we are moving from the accommodative policy. I cannot say when this will happen," RBI deputy governor KC Chakrabarty said
The Reserve Bank of India (RBI) today said that high inflation is a cause of worry for the central bank and it is willing to take policy actions as per the changing economic environment, reports PTI.
"Double-digit inflation is a cause of worry more than the external factors...it is not out of our estimates. If things change fast, there will be more measures depending upon the environment...
"The message is already there that we are moving from the accommodative policy. I cannot say when this will happen," RBI deputy governor K C Chakrabarty told reporters on the sidelines of a seminar in Mumbai.
Wholesale prices based inflation provisionally rose to 10.16% in May, entering double digits for the first time in nearly 20 months, and put pressure on the central bank to hike its policy rates.
Earlier this week, finance minister Pranab Mukherjee said food inflation-which is fuelling overall inflation-has started coming down a little bit and expected it to ease with a good monsoon and crop.
Food inflation stood at 16.12% as of 5th June.
"So far as the monetary part is concerned, the Reserve Bank will look into it, will consider it," Mukherjee had said, indicating that RBI may tighten money supply even before its scheduled 27th July review of the monetary policy.
The central bank has already twice this year raised key policy rates to check food inflation from spreading to manufactured goods.
Asked whether the European financial crisis will weigh on RBI's policy decisions, Mr Chakrabarty said while external shocks can claim some adverse impact on the economy, the RBI is more focused on containing high inflation in the economy.
"International situation is not that volatile. Something has happened in Europe, it has not happened in US. It has some adverse implications. But I think more than that the domestic inflation will definitely be a matter of worry," he said.
The RBI, which started exiting its accommodative stance in October last year, is set to announce its quarterly review of the annual monetary policy on 27th July and is widely expected to hike its repo, and reverse repo rates on or before policy to check inflation.
Moving ahead, the apex bank's policy measures will depend on the economic environment and buying back of G-Secs, announced last evening, was a part of the apex bank's efforts to ensure adequate cash flow in the market, he said.
RBI, on Wednesday, said that the government will prematurely buy back three types of bonds worth up to Rs20,000 crore beginning Friday, as liquidity has come under pressure due to much higher third generation (3G) and broadband spectrum licence fees, and the first quarter advance tax.
On deregulation of savings rates, Mr Chakrabarty said RBI, as stated in its policy, is in favour of deregulating interest rates in the system and leave the market to arrive at more competitive rates.
"We are initiating a debate. The direction is very clear.
We are in favour of deregulating all interest rates but a decision will be taken after debating this," Mr Chakrabarty said, adding, highly competitive market prices do not vary much and will depend on the market conditions.
Earlier, RBI had asked all banks to calculate savings rate on a daily basis from 1st April with a view to improve the returns on such deposits.
Mr Chakrabarty said that RBI has asked banks to prepare a three year roadmap for financial inclusion in a bid to take the banking services to all households in the country.
To achieve this, banks have to make effective use of technology and business correspondent model, he added.
In the last one year, customs authorities of Europe—especially the Netherlands—seized 19 drug consignments belonging to Indian companies while they were en route to their export destinations
At the instance of the World Trade Organisation (WTO), India and the European Union (EU) will try to resolve a dispute, relating to seizure of Indian drugs by some European countries for alleged patent violations, next month, reports PTI.
Negotiators from the two sides will meet in July either at Brussels or Geneva, additional secretary in the commerce ministry DK Mittal told PTI.
India had dragged the EU to the WTO, protesting against the seizure of its off-patent drugs by some European countries while they were en route to export destinations in Africa and Latin America.
In accordance with a WTO rule, both the parties were asked to engage in formal bilateral consultations as part of a last-ditch effort to resolve the problem.
If the issue still remains unresolved, it would be referred to the dispute settlement panel of the WTO.
Mr Mittal said that the Indian team of officials, to be led by a joint secretary, has done enough spade work for the meeting. "We have prepared 40-50 questions (for EU)," he said, adding that the consultation process may take a month or two.
In the last one year, customs authorities of Europe-especially Netherlands-seized 19 drug consignments belonging to Indian companies while they were en route to their export destinations.
The Dutch authorities had alleged violation of their patent laws, even though the Indian government maintained that they were off-patent drugs.
India also received the support of several global non-governmental organisations (NGOs), which claimed that cheaper Indian medicine had improved access to healthcare for the poor in developing countries.
India's $20-billion pharmaceutical industry gets 45% of its revenue from the export of generic drugs.