Budget has offered room for monetary policy easing: MoS Sinha

Macroeconomic stability is fundamental to ensuring that monetary policy has space. If we don't provide that monetary policy space by generally a tighter fiscal policy, we cannot expect monetary policy to loosen up, he said while speaking at an event of the Indian Private Equity and Venture Capital Association (IVCA) here.
  • Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
Real-time Stock quotes, portfolio, LIVE TV and more.
GeStepAhead Travelcafe SME Special
moneycontrol.com

Home » News » Economy

Mar 03, 2016, 01.40 PM | Source: PTI

Budget has offered room for monetary policy easing: MoS Sinha

"Macroeconomic stability is fundamental to ensuring that monetary policy has space. If we don't provide that monetary policy space by generally a tighter fiscal policy, we cannot expect monetary policy to loosen up," he said while speaking at an event of the Indian Private Equity and Venture Capital Association (IVCA) here.

Like this story, share it with millions of investors on M3

Budget has offered room for monetary policy easing: MoS Sinha

"Macroeconomic stability is fundamental to ensuring that monetary policy has space. If we don't provide that monetary policy space by generally a tighter fiscal policy, we cannot expect monetary policy to loosen up," he said while speaking at an event of the Indian Private Equity and Venture Capital Association (IVCA) here.

Post Your Comments

Share Cancel

Budget has offered room for monetary policy easing: MoS Sinha
The Budget that aims to limit fiscal deficit to 3.5 percent of GDP in 2016-17 has been able to provide room for easing of the key policy rate by the Reserve Bank, Minister of State for Finance Jayant Sinha today said.

"Macroeconomic stability is fundamental to ensuring that monetary policy has space. If we don't provide that monetary policy space by generally a tighter fiscal policy, we cannot expect monetary policy to loosen up," he said while speaking at an event of the Indian Private Equity and Venture Capital Association (IVCA) here.

"So, that is the kind of environment we have tried to create on the macro side (in the Budget)." There is widespread speculation that RBI is going to cut policy rate soon as the government has walked a tightrope on the fiscal deficit.

Amid debate over balancing growth and financial management, Finance Minister Arun Jaitley adhered to the fiscal consolidation road map by proposing to keep the deficit at 3.5 percent of GDP in 2016-17.

The fiscal deficit in the current fiscal has been estimated at 3.9 percent, which will be brought down to 3.5 percent in the next fiscal as per the Budget 2016-17.

Citing the example of the previous NDA rule, he said this is what had happened in 1999-2001.

"There was fiscal consolidation, the current account deficit came down, inflation came down. As that happened, interest rate, which was very high over 10-12 percent, came down quite dramatically," he said.

With regard to the proposed goods and services tax (GST), Sinha said it is stuck in the Upper House but may get passed.

"GST is stuck in the Rajya Sabha, but we are very hopeful that the bankruptcy law will be passed. Even for GST, the numbers (in the Rajya Sabha) are going to change... so, we are hopeful of GST as well," he said.

On banking sector reforms, Sinha said the government has announced its intent for consolidation in the sector in the Budget.

"As far as IDBI Bank is concerned, we are going to transform it. We can potentially drop below 50 percent as part of strategic disinvestment. We have made a very strong statement around that. We have consolidation process of public sector banks (that has) started," he said.

The government currently holds 80.16 percent in IDBI Bank .

"All of us as citizens of India own 27 public sector banks. Once the consolidation process starts, I do not think we will have 27 public sector banks (going forward)," he said.

Ads by Google

Buy, Hold, Sell ? Hear it first on M3
Budget has offered room for monetary policy easing: MoS Sinha

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login