Indian Prime Minister Manmohan Singh pledged to restore confidence in Asia’s third-largest economy as he resumed control of the finance ministry after growth slowed to the weakest in almost a decade and the rupee slumped.
India unexpectedly left interest rates unchanged as the fastest inflation among the biggest emerging markets narrows scope to bolster an economy struggling with trade and budget deficits and Europe’s debt turmoil.
India will take several months to reduce inflation to “an acceptable level,” and the central bank’s interest-rate increases haven’t hurt the economy, Prime Minister Manmohan Singh’s top economic aide said.
India signaled it’s prepared to act against excessive declines in the rupee, as Asia’s worst performing currency this year threatens to exacerbate the fastest inflation among so-called BRIC nations and hurt growth.
Reserve Bank of India Governor Duvvuri Subbarao said faster inflation is a “big worry” for the economy and the central bank plans to remove monetary stimulus in a gradual manner to ensure sustained growth.