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Non-inflationary Budget for Monetary Easing: Finance Secy

by AIP Online Bureau | Feb 4, 2025 | Eco/Invest/Demography, Indian News, Policy, Regulation, Risk Management | 0 comments

“The fiscal policy and the monetary policy need to work in tandem, not at cross purposes Â… Because a lot more benefit will come also with monetary easing, if we are able to maintain inflation control.The Budget has projected a 4.4 per cent fiscal deficit in FY’26, down from 4.8 per cent for the current fiscal year.” Finance Secretary Tuhin Kanta Pandey said

New Delhi: The government has taken measures to lower fiscal deficit and delivered a non-inflationary Budget, and the Monetary Policy Committee of the Reserve Bank has to now decide on interest rate cut to boost growth, Finance Secretary Tuhin Kanta Pandey said on Tuesday.

“The fiscal policy and the monetary policy need to work in tandem, not at cross purposes. Because a lot more benefit will come also with monetary easing, if we are able to maintain inflation control,” Pandey said.

The Budget has projected a 4.4 per cent fiscal deficit in FY’26, down from 4.8 per cent for the current fiscal year.

“It’s very important to be clear (what) we have to do within a certain fiscal regime. And, we have to that extent aided the monetary authorities…,” Pandey said at an Assocham post-Budget interaction here.

The monetary policy committee (MPC) of the Reserve bank of India (RBI) will begin its three-day meeting on February 5. The MPC will announce its policy decisions on February 7.

Asked about the concerns of rupee depreciation impacting inflation, the Secretary said the depreciation to some extent brings about imported inflation, but it also adds to export competitiveness.

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.

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