Finance minister Arun Jaitley on Friday denied any government intrusion into the Reserve Bank of India’s (RBI’s) autonomous policy turf, arguing that making suggestions on crucial matters wasn’t an aberration and that the economic system works through communications and dialogues.
The minister listed difficulty in getting credit and liquidity crunch as two immediate challenges, but said the country’s ability to maintain 7-8% economic growth was “fairly certain”. On a day when leading economists, including Raghuram Rajan, released a report suggesting that focussing on growth at the cost of fiscal prudence would be unwise, Jaitley reiterated that the Centre would meet its FY19 fiscal deficit target of 3.3% of GDP.
Commenting on fluctuations in oil prices, Jaitley said as a net buyer, once a certain resistance level was breached, elevated prices could impact inflation, currency movement and current account deficit. “We can get satisfaction that inflation has been kept below the Monetary Policy Committee’s target,” he said.
Asserting that autonomy didn’t mean institutions would work in isolation, Jaitley, however, added that the government respected the independence of the central bank.
“We told them these are the problems that markets are facing and these come under your domain… If the sovereign government is pointing out that there are credit and liquidity issues in the country, how is it infringing on the autonomy (of RBI)?” the minister said at a Ficci event.
“Hope things will work out well in the future.”