Kamath worried over inflation impeding growth

Mumbai, Feb 8 (PTI) ICICI Bank chairman K V Kamathtoday sounded alarm bells on rising inflation saying pricerise numbers at the current level are not at all comfortable.

"Current inflation numbers are not at comfortablelevels. If we need to make growth sustainable, we need tocontrol inflation and interest rates," Kamath told newsmen onthe sidelines of the Nasscom India Leadership Forum 2011 here.

On the impact of the successive interest rate hikes bythe Reserve Bank, he said, if interest rates are hikedfurther, it can play a spoilsport for the present high levelof growth.

Food inflation rose to 17.05 per cent for the weekended January 22, rising from previous week''s 15.57 percent, while the wholesale price based headline inflation forDecember also inched up to 8.43 per cent from 7.48 per cent inNovember after falling for three successive previous months.

Food inflation has remained stubborn for a year now andeconomists say there is evidence of it spilling into overallinflation.

As inflation numbers, both food as well as general,remained unacceptably high, Reserve Bank has raised interestrates seven times since last March to batten it down. It hasraised its March-end inflation estimate to 7 per cent in thejust announced monetary policy review from 5.5 per cent it hadprojected earlier in the fiscal.

The government has projected 8.6 per cent GDP growththis fiscal on the back of an 8.9 per cent growth in H1.

On whether high interest regime is here to stay,Kamath said, till inflation does not come under control, itwill remain high. He further said, it is difficult to foreseean easy money regime now as inflation so far has not beenresponding to the efforts of the central bank.

"For the past one-and-a-half years, inflation has notbeen responding to the traditional monetary and fiscalinstruments," Kamath said.