Finance Minister P Chidambaram on Tuesday backed the Reserve Bank's decision to hike overnight interest rates, saying it was aimed at managing short term risks and was in line with other economies.
"The whole exercise is to contain inflation," the minister told reporters in Parliament when asked about RBI's decision to raise repo and reverse repo rates by 0.25 per cent.
"I am not surprised at this increase. The governor said he would ensure that productive sectors would not be denied credit," Chidambaram said, adding that what RBI Governor Y V Reddy was doing is to contain inflationary expectations.
RBI has recognised the short term risks to the economy and reprice the risks as in other central banks, while noting that Indian Economy was performing well. "One can expect economy to grow in a healthy and robust way," he said.
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