The Reserve Bank of India (RBI) should consider the steps taken by the government to contain inflation and not take too many monetary measures that would impact business and growth, commerce and industry minister Piyush Goyal said, reported The Economic Times.
Speaking at a panel discussion on ‘India at 75: Strategic Outlook’ at the World Economic Forum in Davos, Goyal said India’s overall food inflation was at a manageable level and the government will take measures to support business wherever needed.
The government cut duty on petrol and diesel on Saturday, and also customs duty on inputs for steel and plastic products among other measures to contain inflation. On Tuesday, it allowed dutyfree imports of certain edible oils and restricted sugar imports to 10 million tonnes.
On the issue of privatisation, he said that one can’t move everything overnight from the government to the private sector and a calibrated approach has been taken.
“The Reserve Bank had also given clear indication that should the government come up proactively with certain measures then it will help Reserve Bank refrain from too much of a (monetary) policy action which could hurt India’s growth,” Goyal said.
“The Reserve Bank, I think, should be happy with the steps the government has taken and hopefully this will resonate well in terms of continuing the growth momentum and not taking too many steps on the monetary side, which may not necessarily be in the best interest of business in the long run. ”
Retail inflation hardened to an eight-year high of 7. 79% in April.
In a surprise move, the RBI raised the policy repo rate by 0. 4 percentage points (40 basis points) to 4. 4% earlier this month. The central bank’s monetary policy committee (MPC) had also suggested a cut in fuel taxes to dampen inflationary pressures.
On the issue of wheat exports, Goyal said India was never a traditional player in the international wheat market. Two years ago, exports were 2 million tonnes and last year, about 7 million tonnes. “We will to the best of our ability, continue to export,” Goyal said.
At a separate event, he said that inflation has a serious impact on the economy as it increases rates, weakens currency and slows economic growth.
“Therefore, there are times when serious and impactful measures need to be taken. Overall, it will be good for the economy,” Goyal said at the CII-Delloite Davos Dialogue.