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Indian central bank chief stresses independence from government

Published on May 10, 2014 12:03 AM
India's Finance Minister Palaniappan Chidambaram (L) and Reserve Bank of India (RBI) Governor Raghuram Rajan (2nd L) at New Delhi.--PHOTO: REUTERS

ST GALLEN (REUTERS) – The head of the Reserve Bank of India said on Friday that he – and not the Indian government – was responsible for setting monetary policy, asserting his independence in taking a hawkish stance on inflation amid an election hinging on how to revive economic growth.

India’s five-week long election is set to conclude on Monday, with results due on Friday. The opposition Bharatiya Janata Party and its allies are leading in the polls after campaigning on a promise of reviving an economy expanding at its slowest rate in a decade.

Should the BJP win, analysts say RBI Governor Raghuram Rajan could come under political pressure to retreat from his hawkish stance on inflation.

“The key question is what kind of equation do you have with the government? I determine monetary policy, I say what it is,” Rajan said at a conference in St. Gallen in eastern Switzerland. “The government can fire me, but the government does not set monetary policy.”

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