Government seeks to distance itself from CEA's comment

NEW DELHI: The government on Thursday sought to distance itself from chief economic adviser (CEA) Arvind Subramanian's comments on RBI's erroneous reading of inflation, a statement that was seen to be aimed at RBI governor Urjit Patel-led Monetary Policy Committee, with officers saying that the economist was speaking in his personal capacity and did not represent the Centre's views.

“He is the policy adviser. He analyses all the trends, including inflation. CEA has a certain understanding of the inflation-interest rate matrix and if I read correctly, he said that policymakers should take into acco unt these fundamen tal factors. It was an advice based on the analysis by the advi ser to the government.

Interest rates are primarily the function of monetary policy as decided by RBI from time to time,“ a senior official said.

The officer also insisted that there was “no problem“ between RBI and the government and sought to downplay any perceived differences. Soon after the release of inflation numbers on Wednesday , Subramanian had issued a written statement slamming the wrong reading of the inflationary trend and added that the “paradigm shift“ had been “missed by all“, which was reflected in the “large, one sided, and systematic inflation forecast errors that have been made“.

Subramanian's stance had also found a backer in principal economic adviser Sanjeev Sanyal.