Need structural, fiscal measures to boost demand and growth: RBI Governor Shaktikanta Das

The Reserve Bank of India (RBI) Governor Shaktikanta Das said that there is need for structural and fiscal measures along with monetary policy to augment demand and growth in the economy.

"Monetary policy, however, has its own limits. Structural reforms and fiscal measures may have to be continued and further activated to provide a durable push to demand and boost growth," Das said on January 24.

He added that steps like prioritising food processing industries, tourism, e-commerce, startups and efforts to become a part of the global value chain could give significant push to growth.

"The government is also focusing on infrastructure spending which will augment growth potential of the economy," Das said. He added that states should also play an important role by enhancing capital expenditure which has high multiplier effect.

The country's economic growth is on a downtrend raising concerns on the outlook going ahead. This is despite several measures taken by the government last year to boost demand.

In the December monetary policy committee meeting minutes, Das said that it is imperative that monetary and fiscal policies work in close coordination. He added that the RBI would await provide greater clarity about the further measures that the government may initiate in its budget.

Das also said that central banks need to take a view on the true nature of slack in demand and supply side shocks to inflation for timely use of counter-cyclical policies.

"In recent times, shifting trend growth in several economies, global spillover effects and disconnect between the financial cycles and business cycles in the face of supply shocks broadly explain why monetary policy around the world is in a state of flux," he said.