Concerned over the deteriorating macro-economic indicators of the economy, RBI Governor Raghuram Rajan has stated that high inflation is limiting the central bank’s ability to boost growth. Rising inflation has become a hurdle for Indian economic growth as it has been eroding consumers and business confidence in the country. Meanwhile, in order to restrain rising inflation, the RBI has been raising the policy rates over the past few months.
The governor has said that high inflation leading to fall in domestic savings and relatively high fiscal deficit are key concerns for the Indian economy and has urged the government to continue with fiscal consolidation to support the economy. Further, general elections due by May is creating uncertainty among the investors, while a stable new government would be positive for the economy, he added. The central bank is likely to resume tightening monetary policy by early next year on account of high inflation even as the economy is growing below the decade low of 5 percent in the current fiscal.
Meanwhile, the RBI has noted that Indian economy is expected to witness modest improvement in growth on the back of good monsoon which has boosted the prospects of summer crops and higher exports. The central bank has expressed the need for long-delayed legislative reforms, stalled infrastructure project clearances and fiscal consolidation to maintain the momentum of economic recovery.
The governor has said that high inflation leading to fall in domestic savings and relatively high fiscal deficit are key concerns for the Indian economy and has urged the government to continue with fiscal consolidation to support the economy. Further, general elections due by May is creating uncertainty among the investors, while a stable new government would be positive for the economy, he added. The central bank is likely to resume tightening monetary policy by early next year on account of high inflation even as the economy is growing below the decade low of 5 percent in the current fiscal.
Meanwhile, the RBI has noted that Indian economy is expected to witness modest improvement in growth on the back of good monsoon which has boosted the prospects of summer crops and higher exports. The central bank has expressed the need for long-delayed legislative reforms, stalled infrastructure project clearances and fiscal consolidation to maintain the momentum of economic recovery.
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