Infrastructure spending can curb supply-side inflation, says RBI official

Sitikantha Pattanaik, an executive director at the Reserve Bank of India (RBI), on Thursday said that a focus on spending on infrastructure would help the country curtail long-term, supply-side inflation. 

The central bank official was speaking at an event in the national capital.

The sharp rise in inflation across most but not all—major economies ensured that attention was focused on the urgent task of taming the inflation dragon.

RBI Monetary Policy Committee (MPC) Member Ashima Goyal said at the event that uneven rainfall in some regions could impact crop output and may not augur well for inflation.

The RBI has hiked the repo rate by 140 basis points to 5.40% from May to August, as it aims to bring down inflation within its 2%-6% target band.

Meanwhile, Union Finance Minister Nirmala Sitharaman today said the RBI will have to be more synchronised with the fiscal policy and other factors in taming inflation.

Inflation management cannot be singularly left to the monetary policy, which has proved totally ineffective in many countries, she said at a seminar organised by economic think-tank Icrier.

There are economies where policy is designed in such a way that the monetary policy and the interest rate management is the one and the only tool to handle inflation, the finance minister stated.