Sacrifice growth to scale down inflation, says Governor Subbarao

Patna, Feb 18 (ANI): Reserve Bank of India (RBI) Governor D. Subbarao has said that a bit of growth needs to be sacrificed temporarily in order to bring inflation down.

"What I want to give is a message and that is that there is no way we can bring inflation down without sacrificing some growth. People talk about it in textbook economics. You have to sacrifice a bit of growth in order to bring inflation down but that scarifies needs to be short term," Subbarao told the media here on Friday.

"We scarifice in the short term, so that our medium cum growth becomes more sustainable. If there is high inflation, there will uncertainty for investments, there will uncertainty for consumers and high inflation scenario in not a use of growth," he added.

Subbarao further said inflation is anemic for growth.

"It is true that in economic literature, there is a concept of trading of between growth onsultations but that happens below a threshold level of inflation. At below a certain level of inflation, you can trade a bit of inflation to get a high level of growth but above a threshold level of inflation, inflation is anemic at growth," said Subbarao.

"For much of 2010, for all of 2011, we had inflation in the range of 9 to 10 percent, which is way above the threshold level and we had to act very aggressively and decisively on the monetary policy side to bring inflation down," he added.

Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. (ANI)