The Reserve Bank of India (RBI) has enough autonomy though it is a difficult balance to enforce accountability and independence, the governor of RBI told a television channel.
"Contrary to popular perception we do enjoy autonomy," Duvvuri Subbarao said in an interview to ET Now, aired on Friday.
He said the issue of autonomy for central banks had come up during the world financial crisis and it was something worth pondering.
"We should be concerned about maintaining the independence on autonomy of central banks," he said.
While economic recovery has picked up fast in India, inflation pressures are mounting driven by high food prices.
Top government officials have indicated there was no need for any sharp tightening by the RBI now as this would hit a nascent recovery, while central bank officials have been referring to risks of supply side inflation spilling over to broader prices.
India's industrial output grew at its fastest pace in two years in November at 11.7%, while the economy expanded 7.9% in the September quarter.
In 2008/09, economic growth had slowed to 6.7% from 9% or more in the previous three years.
The wholesale price index, the main price barometer, rose 7.3% in December, which was the biggest annual rise since November 2008.
Subbarao also said the Reserve Bank was cautious in its approach to financial sector liberalisation and capital account convertibility.
"There is a roadmap for that and we are traversing along ... the roadmap itself is dynamic irrespective of the crisis," Subbarao said.
He said there was no concern of any sovereign debt default in India as the share of foreign investment in sovereign debt was limited.
Source: ReutersCourtesy moneycontrol.com
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