Indian Prime Minister's Economic Advisory Council Mr C Rangarajan chairman said the RBI will have to continue with its monetary tightening policy to tame inflation, which stood at over 8% in February.

Mr Rangarajan on the sidelines of the Skoch summit said that "The inflation rate continues to remain high and therefore, monetary policy will have to remain tight in order to ensure that the inflation rate is brought down.”

The Reserve Bank of India has revised key policy rates eight times since March, 2010, to tame inflation. In its mid-quarterly policy earlier this month, the central bank raised the short-term lending and borrowing rates by 25 basis points. The RBI is slated to come out with its quarterly policy review on May 3.

He further said overall inflation is likely to decline to 7.5% in March from 8.31% in February. In the next fiscal, it could decline to 6%.

Talking about the impact of the Libyan crisis on the Indian economy, Rangarajan said it could have impact on crude oil prices, adding that if the crude oil prices remains at a high level, this could impact government finances and price level.

He expects the Indian economy to grow by 8.6% in the current fiscal and 9% in the next financial year. However, inflation and deficits are constraints to 9% sustainable growth, Mr Rangarajan added that "I do not subscribe to the view that high growth leads to high inflation.”

(Sourced from FE)