A week ahead of the RBI reviewing the monetary policy with expectations of a policy rate hike, Commerce and Industry Minister Anand Sharma has cautioned that raising cost of borrowing "may not be suitable" tool to rein in inflation. Making out a strong case for easy finance to the industrial sector, in a letter to Finance Minister Pranab Mukherjee, Sharma said that industrial growth has already to an 18-month low of 2.7 per cent in November 2010.
The high inflation in primary articles, particularly, vegetables is more an account of supply side constraints and monetary policy may not be the most suitable intervention to deal with the situation. When they appreciated concerns on inflation, the minister explain about the Industrial sector clearly needs sustained support to enable compete recovery soon.
