Monetary policy should have been more aggressive: Virmani

The Reserve Bank, which has injected Rs 3,00,000 crore into the system since October, should have been much more aggressive in its monetary policy to deal with the global financial crisis, Chief Economic Advisor Arvind Virmani said on Wednesday.

"Monetary policy must be much more aggressive in measuring financial aspects of shocks than it has been," Virmani said here even as he refrained from mentioning the RBI in this regard.

Some analysts had blamed the earlier tight monetary policy of the Reserve Bank for the decline in industrial production in October.

He exuded confidence that the Indian economy is going to bounce back.

"I have great faith in Indian entrepreneurship. We must accelerate to compensate for the decline in private investment," he added.

Clarifying that all financial flows would not be affected by the global financial meltdown, he said FDI flows in the first half of the current year have increased and so has non-resident investment.

The main thing that has declined is equity flow all over the world as people needed cash, he added.

Virmani said in the past five years employment generation in the country also had gone up due to export opportunities.

Regarding inflation Virmani said 66 per cent of the inflation was due to prices of iron ore, iron and steel, oil and refined products, and edible oil, which rose globally.

On the rupee's movement against the dollar, he added, "I have been monitoring the movement of the dollar. The depreciation in the rupee has happened primarily due to the appreciation of the dollar against major currencies."