Which is the lesser of the two Devils - Inflation or Slowdown?

Reserve Bank of India considers Inflation a more cause of concern than slow rate of growth.

Contributed by - Arihant Bhandawat

Inspite of recent noises made by Finance Minister, P. Chidambaram, to prop up the markets, ease liquidity worries and enlist plans of government to reduce deficit financing, RBI has kept liquidity and interest rates on a tight leash. 

Considering inflation as a bigger worry, RBI has kept safe distance from any big-bang rate cut announcements which the market had been expecting following the FinMin's recent announcement to phase out deficit financing to manageable limits by 2017. Clearly, by keeping interest rates unchanged RBI has made everyone know about its priority.

It shall be interesting to see how this battle between Inflation and Slowing economy plays out in the near future.

Watch this space for more action.