RBI should do a policy balancing: Ahluwalia

The Planning Commission seems to be moving away from the Reserve Bank's views on the need for tighter monetary controls as it fears that a tightening of credit taps by the central bank would affect economic growth in India.

RBI must be careful while tightening its monetary policy to fight inflation as it may mar prospects of high growth, which is also equally important, Montek Singh Ahluwalia, deputy chairman of the Planning Commission, said today.

Ahluwalia was addressing reporters after announcing a 30 per cent increase in central budgetary assistance to Manipur.

He wanted the RBI to have a longer-term view of economic growth and financial stability.

"The balance between controlling inflation and protecting growth is an issue which the people responsible for short-term monetary policy have to take a look at. That is an issue I want the RBI to consider very carefully," Ahluwalia said.

He feared the central bank is giving too much importance to fighting inflation, which may not be entirely due to surplus liquidity.