New Delhi, April 6: Finance Minister Nirmala Sitharaman stated on Monday that India’s robust fiscal position and solid foreign exchange reserves provide the Reserve Bank of India (RBI) with increased policy flexibility.
While addressing the golden jubilee celebration of the National Institute of Public Finance and Policy, she emphasized that India has the fiscal space to maintain government capital expenditure programs, allow the RBI to reduce rates, and provide targeted assistance to affected sectors. This is the result of a decade of fiscal discipline, which is now yielding positive outcomes.
Her remarks come ahead of the monetary policy review scheduled to be announced by the RBI on Wednesday.
Sitharaman also noted that India’s debt-to-GDP ratio is among the lowest globally, with the International Monetary Fund (IMF) projecting further declines by 2030.
She added that the foreign exchange reserves are sufficient to finance the country’s imports for 11 months, serving as a buffer against external shocks.
The prudent fiscal management has enabled the government to implement measures such as reducing excise duties on petrol and diesel, protecting consumers from rising petroleum prices due to the Iran conflict. Additionally, targeted exemptions have been provided for critical petrochemical products and operations in Special Economic Zones (SEZs) to ensure job security amid uncertainties in global markets.
Sitharaman described the conflict in West Asia as a “systemic shock,” adding further challenges to a world already filled with instability, uncertainty, and ambiguity. She warned that rising crude oil prices and currency pressures could complicate the inflation scenario, making policy adjustments even more challenging.
Indeed, the RBI’s Monetary Policy Committee has commenced its review meeting on Monday, discussing potential monetary policy measures. These will be announced on Wednesday. Economists predict that the RBI will keep key interest rates unchanged due to increased inflation risks stemming from the Iran conflict, which has led to significant price surges in petroleum products, fertilizers, and petrochemicals.
Last month, the government, in consultation with the RBI, announced its borrowing program for the first half of the next fiscal year, planning to raise ₹8.2 lakh crore over six months. This constitutes about 51 percent of the borrowing set in the annual budget.
According to the official borrowing calendar, the total annual borrowing has been revised down from the previous estimate of ₹17.2 lakh crore to ₹16.09 lakh crore. This gradual reduction in the borrowing program is expected to maintain sufficient liquidity in the banking system, allowing businesses to continue their investments and create job opportunities in the economy.
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My name is Bhupendra Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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