The Reserve Bank of India Governor, Dr D. Subbarao, defended the move to go in for 75 basis points hike in cash reserve ratio (CRR), stating that this quantum was the best at the current point of time.
He was responding to a query on the perception in certain quarters that the 75 bps hike was “too little” when the RBI itself had raised its headline inflation projection for end-March to 8.5 per cent from earlier 6.5 per cent.
The RBI Governor also refuted criticism that the central bank may have been soft on inflation this time round while leaning in favour of growth.
Dr Subbarao said that the central bank had also factored in the tax payments that are likely to flow in March before taking a call on the systemic liquidity and deciding the extent of CRR hike.
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