RBI stance on expected lines: Economic affairs secretary

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Published: February 3, 2016 1:06:41 AM

The ‘status quo’ maintained by the Reserve Bank of India (RBI) in its monetary policy on Tuesday was on expected lines, economic affairs secretary Shaktikanta Das said, reaffirming the government's commitment to the path of fiscal consolidation.

The ‘status quo’ maintained by the Reserve Bank of India (RBI) in its monetary policy on Tuesday was on expected lines, economic affairs secretary Shaktikanta Das said, reaffirming the government’s commitment to the path of fiscal consolidation.

The RBI kept its policy rate on hold at 6.75%, opting to wait until after the government’s annual budget on February 29 to decide on whether to cut interest rates further.

The RBI’s target of 6% retail inflation for this January is likely to be met. While current trends are largely on track to meet FY17’s 5% inflation target, this faces some risks from the implementation of the Seventh Pay Commission awards and if weak monsoons continues for the third year in a row in 2016. The additional spending of about R1 lakh crore, on account of pay commission award and higher pension for armed forces, could put pressure on finances of the Centre as well as on inflation in the next fiscal year.

While the Centre would spell out its fiscal deficit target for 2016-17 in the forthcoming budget, Das said, “The government continues to remain committed to the path of fiscal consolidation, quality of expenditure, maximising the revenue, improving governance while ensuring projects are better implemented and growth is revived.”

Present perfect

Government reaffirms its commitment to the path of fiscal consolidation.

Current trends are largely on track to meet FY17’s 5% inflation target.

Implementation of 7th Pay Commission awards may put pressure of govt’s finance.

Government said it will meet the fiscal deficit target for the current financial year

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