The good growth numbers have raised concerns that Reserve Bank of India might soon take measures to absorb excessive liquidity in the banking system, which in turn could push up the prices of assets and commodities.

Bankers feel that huge surplus funds with banks may prompt RBI to prioritise liquidity management over rate hikes. Banks have parked funds over Rs. 1 lakh crore with the Reserve Bank of India which indicates massive liquidity in the system.

Jahangir Aziz, chief economist, JP Morgan India, says` I think tightening will be first focused on sucking out excess liquidity through CRR hike and later through rate hikes. Much of it will be driven by the central bank's concern on the possibility of asset price inflation.'

Conventionally, in a scenario when there is high growth and inflation, RBI hikes policy rates. However, in the current circumstance with ample liquidity in the system and low credit demand, the rate hike might not prove helpful. Moreover, the current inflation is said to be more due to supply-side factors. In such a situation, monetary measures may not help.