Nirmala Sitharaman Says Monetary, Fiscal Policy Collab Will Aid Economy, Private Capex
The RBI and the government will work in coordinated fashion keeping growth in mind, Finance Miniser Nirmala Sitharaman says after a customary post-budget meeting with the central bank's board.
Be it inflation or growth, the coordination between monetary and fiscal policy will be beneficial for the economy, Finance Minister Nirmala Sitharaman said.
"Nobody has encroached on anyone's territory and that has never existed in the last 10 years and I don't see that happening in the future as well. RBI and government will work in coordinated fashion keeping growth in mind," she said after addressing the Reserve Bank of India board.
Answering to a query, Sitharaman said that she expects some recovery in private sector investments.
"You can safely see that the triggers for the consumption led cycle are clearly felt by those who have to take those investment decisions," she said, adding that the RBI's decision to cut interest rates will also help to move in alignment and in the required traction that the government would need in this course.
On Friday, India's Monetary Policy Committee, led by newly appointed RBI Governor Sanjay Malhotra, cut the benchmark repo rate by 25 basis points, marking the first change in the benchmark lending rate in two years and the first rate cut in nearly five years.
"At least since after the Budget, few inputs that I have had...that orders from fast moving consumer goods for the period of April to June are already getting booked. Industry is already seeing signs of a possible recovery of consumption and as a result many of them are already reviewing their capacity utilization itself," she said.
On reviewing the monetary policy calendar to middle of the month from the beginning of the month, Malhotra said that he had given this a thought when he came on board because of recent data.
However, other meetings that are lined up in the middle of the month such as the World Bank and International Monetary Fund, it has been decided to keep the meeting early in the month.
He also said that the MPC has kept the rupee assumption at 87 and that there has been no change in the central bank's approach towards rupee.
"We are not targeting any price or band for rupee. Our market is quite efficient and we depend on market forces to determine the value of the rupee," he said.
When asked about liquidity measures by the RBI, he said that the RBI has taken up measures by way of daily, long-term variable rate repo auctions, open market operation purchases and a cut in cash reserve ratio for both transient and durable liquidity.
Going forward, the RBI will be very watchful, agile and nimble for the requirements of the banking system to provide both transient and durable liquidity. "We have sufficient instruments to infuse liquidity in the banking system, so there should not be any worry on that account," he said.
On inflation, he said that most of the depreciation has come because of global uncertainty led by US President Donald Trump's tariff related announcements and hopefully that should settle down and should help in the downward movement of inflation.
