Amid a raging debate over RBI's tight money policy vis-a-vis growth, Prime Minister Manmohan Singh today favoured revisiting the possibilities and limitations of the monetary policy in a globalised and fiscally constrained economy.
He also called for a "fresh thinking" on macro-economic policy-making, its targets and instruments.
"And I would venture to think that the time has come, when we should revisit some of those areas-the possibilities and limitations of monetary policy in a globalised economy, in a fiscally constrained economy," Singh said after releasing the fourth volume of "RBI History-Looking Back and Looking Ahead" at his residence.
He also said macro-economic policy making, targets and instruments was another area "where I feel fresh thinking is called for".
The function was attended among others by outgoing Governor D Subbarao, former Governors C Rangarajan, Amitabh Ghosh, Y V Reddy, current and past deputy governors, Ministers of State for Finance Namo Narain Meena and J D Seelam and Planning Commission Deputy Chairperson Montek Singh Ahluwalia.
Singh expressed the hope that future Governors, including Governor-designate Raghuram Rajan, who was among the audience, would attempt to revisit some of these areas.
The remarks assume significance in the context of the current debate over RBI's hawkish policy stance on checking inflation vis a vis government's priority on promoting growth.
In his speech, Subbarao characterised as "inaccurate and unfair" the contention that the central bank was "obsessed with inflation, oblivious to growth concerns".
Singh said a degree of national consensus was required if the government has to carry out social and economic change in a country as large, as diverse and as complex as India is.
Hailing the Reserve Bank, he said, it had served the country with great distinction but "the best is yet to come".
He said the history of RBI is the history of growth of India since independence and it has done the country proud by playing a role in shaping the monetary and credit policies and influencing the supply of credit to rural areas.
The Prime Minister also wished the outgoing Governor the best saying he has served the RBI and country with great devotion.
Welcoming his successor Rajan, he said, "in him we have a very distinguished economist of international fame. I sincerely hope that RBI will see a more glorious period under his governorship."
In his speech, Subbarao termed as oversimplification that governments are for growth and central banks are for price stability.
He said, it was another oversimplification to assert that there is a tension between growth and inflation and that one has to play a trade off between the two in policy making.
"To contend that the Reserve Bank is obsessed with inflation, oblivious to growth concerns, I think, is both inaccurate and unfair," said Subbarao, who demits office on September 4.
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