Finance minister P Chidambaram on Monday said the mandate of a central bank is not only to ensure price stability but also to promote growth and generate employment.
Stating he did not expect any hike in interest rates by the commercial banks,the minister said they had enough funds to meet credit demands and that the onus of coming up with large investment projects rests with the industry. All over the world thinking in changing. The mandate of a central bank must not only be price stability. The mandate of central bank must be seen as part of larger mandate which includes price stability,growth and maximising employment, he said.
Admitting that world over,governments and central banks have not been on the same page,he said,in fact this antagonism between central bank and government is very functional antagonism,a healthy antagonism. I am not saying it is unhealthy,it is perhaps healthy. RBI has been maintaining a tight monetary stance overlooking the pressure for a steep cut in interest rate. Tomorrow,the RBI Governor will make a quarterly review policy statement. So let us wait for the statement which will throw more clarity on the subject, Chidambaram said.