Mumbai: The Ministry of Finance and Reserve Bank of India (RBI) are on the same page about the issue of sustainable pandemic stimuli.
Minister of Finance Nirmala Sitharaman said in an interview to Bloomberg in New York that stimulus would continue.
“The emphasis on building health infrastructure will continue” and will the government will spend capital expenses and infrastructure, he said.
Meanwhile, the state of the economic report was prepared by RBI staff led by Deputy Governor Michael Patra called the need to continue policy support for a longer period to ensure sustainable and inclusive recovery.
Simultaneous statements show that even as a new highest test market every week, both the government and the central bank want to take a punch bowl.
While globally there are concerns over inflation, the central bank believes that the prospect of prices has increased and the central bank is not interested in acting too early and causes damage to the economy.
“Premature tightening can bring a stagflation of all fears, the dismissal of growth such as the economy recovered.
In an influential view, a history of thick with examples of central banks that do not do it – underestimate the need for sustainable stimuli,” the state of the economic report said.
However, one problem in which the government has not paid head to the central bank, facilitates fuel prices through tax reduction.
“The challenges I will face, and the teams also watch in the ministry, is the way the price of fuel leads to a big peak,” Sitharaman said.
“This uncertainty is a big element for me,” Sitharaman said.
Reports published by the RBI said, “In inflation, the MPC call is true, with softer food prices than expected to provide a boost for further disinflation from the target closer to the target.
On the other hand, the economy might be healing, but still digging From one of the deepest contractions to hit the big economy.
“Last month, in his policy statement, the Governor of RBI Shaktikanta Das called for a tax reduction on gasoline and diesel.
“Efforts to contain push-push pressure through reversals calibrated from indirect taxes to fuel can contribute to a decrease in more sustainable inflation and detaching expectations of inflation,” said the watershed.
In the Disinvestment program, Sitharaman said that the government encouraged to get the initial public offering of the life insurance company in March and the delay would not be caused by a lack of political will.
“We encourage it to do it,” Sitharaman said.
“The problem is not that we don’t want it or we concentrate it now, it’s more a question about doing legal processes,” he added.