NEW DELHI: Finance secretary Tuhin Kanta Pandey on Tuesday said govt has taken measures to lower fiscal deficit and delivered a non-inflationary Budget, and hoped that the RBI’s monetary policy will work in tandem with fiscal policy to support growth. He also said that although rupee depreciation increases inflation on imported inputs, it also adds to export competitiveness.
Pandey said that govt has bettered its fiscal deficit projections for the current fiscal as well as the next. The fiscal deficit for FY25 has been pegged lower at 4.8% of GDP, lower than budgeted 4.9%, while for FY26 the deficit is projected to be 4.4%, lower than what was given in the consolidation road map.
“It is very important to be very clear that we (govt) have to remain within a certain fiscal regime. We have, to that extent, aided the monetary authorities to say that if they (RBI) have to do what they have to do, we are supportive. The fiscal policy and monetary policy need to work in tandem not at cross purposes,” Pandey said.
The secretary said the economy would reap a lot more benefits with monetary easing and keeping inflation under control.
“Inflationary policies can really work only in the short-run in terms of pushing growth. If we have to have sustained growth, we need to have a good grip on inflation. That’s the balancing that we need…,” Pandey said at an Assocham post-Budget interaction.
The monetary policy committee (MPC) of the Reserve Bank of India (RBI) will begin its three-day meeting on Feb 5. The MPC will announce its policy decisions on Feb 7. To a question on whether the Monetary Policy Committee will decide to cut policy rates, Pandey said “I think it’s a call that MPC will take. They are seized of the situation. They will take a call.” agencies
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