A convergence of policies: Pranab Mukerjee

Finance minister Pranab Mukherjee has welcomed the Reserve Banks' monetary policy stance, saying that the measures announced today complement the finance ministry's own policies of controlling inflation and promoting sustainable growth.

"Earlier today the governor of the Reserve Bank of India announced a set of new monetary policy measures. The well-balanced measures, which involve raising the repo rate, the reverse repo rate and the CRR by 25 basis points each, reflect a mature and balanced view of the needs of our economy and I fully endorse the measures," Mukherjee said.

"They complement well the policies of the ministry of finance aimed at controlling inflation and promoting sustainable growth. These policies should have a gentle impact in tightening money in the economy and should dampen further inflationary pressures," he added.

While the RBI has projected 2010-11 inflation level at 5.5 per cent, the finance minister said long-run inflation is difficult to predict and is based on some statistical analysis but also on intuition.

"My own belief based on analysis done in my ministry is that inflation is now on a downward trajectory and in 2010-11 will be less than 5.5 per cent and, in fact, closer to 4 per cent with an upward bias," he said.

The small tightening of credit and other policy changes are in the right direction, he said, recalling that these policy rates were lowered in the last two years in order to combat the fall-out of the global recession on the Indian economy.