Former RBI governor Raghuram Rajan on Monday said the central bank will have to raise interest rates to tame inflation and the hikes need not be considered by politicians and bureaucrats as “anti-national” activity. Known for his frank views, Rajan also said it was important to remember that the “war against inflation” is never over. “Inflation is up in India. At some point, the RBI will have to raise rates, like the rest of the world is doing,” he said in a LinkedIn post.
Costlier food items pushed the retail inflation to a 17-month high of 6.95% in March, above the upper tolerance level of the RBI, while the wholesale price-based inflation rose to a four-month peak of 14.55%, mainly due to hardening of crude oil and commodity prices. “Politicians and bureaucrats will have to understand that the rise in policy rates is not some anti-national activity benefiting foreign investor, but is an investment in economic stability, whose greatest beneficiary is the Indian state,” he said. Rajan is currently a professor at the University of Chicago Booth School of Business.
