Low inflation must to sustain growth: RBI governor

Reserve Bank of India (RBI) governor Dr D Subbarao said low inflation is necessary to sustain growth and a certain level of regulation is needed to rescue the Indian economy from the current global financial turmoil.
Delivering a lecture, 'Global Financial Crisis and Lessons Learnt by India', at Nepal Rastra Bank here yesterday, he underlined the need to bring down inflation and inflationary expectations to sustain growth.
The visiting governor of the RBI also said deregulation alone is not sufficient to maintain a sound economy and a certain level of regulation is necessary for rescuing the economy from the current financial crisis.
Subbarao''s comments come against the backdrop of the Indian central bank''s fight against inflation, which was 9.44 per cent in June. Besides, food inflation for the week ended July 30 shot up to 9.9 per cent sparking investor fears of another round of monetary tightening, which will further push up interest rates impacting growth.
The RBI has hiked its lending and borrowing rates 11 times since March last year in a bid to curb consumer spending to tame the rate of price rise. However, high interest rates have increased borrowing costs for the industry crimping corporate margins and fanning fears of a slowdown in economy''s expansion.
Subbarao, who is on courtesy visit in the invitation of central bank governor Dr Yuvaraj Khatiwada shared his experience regarding the current global financial crisis with senior bank officials.

Talks on IRs 500 and IRs 1000 denomination notes
KATHMANDU: Governor of Reserve Bank of India Dr D Subbarao said that there is a possibility to transaction of 500 and 1000 denomination notes in Nepal. It is possible to transact those notes in Nepal but it should be agreeded by governments of Nepal India, he said. Curently, 500 and 1000 denomination notes are not accepted in Nepal and its tranasaction is illegal according to NRB laws.