India’s strong fiscal position gives RBI more policy space: Finance Minister Nirmala Sitharaman

NEW DELHI: India's strong fiscal position and robust foreign exchange reserves provide the Reserve Bank of India with more policy flexibility, Finance Minister Nirmala Sitharaman said on Monday.

Addressing the golden jubilee celebrations of the National Institute of Public Finance and Policy, the Finance Minister said: "India has fiscal space with room to maintain the government's capex programme, room for the RBI to cut rates and room to offer targeted support to affected sectors. This is the dividend of a decade of fiscal discipline that is paying dividends."

Her statement comes ahead of the monetary policy review to be announced by the RBI on Wednesday.

Sitharaman also highlighted that India's debt-to-GDP ratio remains among the lowest globally, with the International Monetary Fund projecting a further decline by 2030. The foreign exchange reserves are sufficient to finance the country's imports for as many as 11 months, which provides a cushion against external shocks, she added.

She said that prudent fiscal management has enabled the government to roll out measures such as excise duty cuts on petrol and diesel, to cushion consumers from soaring prices of petroleum products triggered by the Iran war. Besides, targeted exemptions for critical petrochemical products and SEZ operations in the domestic tariff area have been made to protect jobs amid uncertainties in global markets.

The Finance Minister said that the West Asia conflict has emerged as a "systemic tremor", adding to a world marked by volatility, uncertainty and ambiguity. Rising crude prices and currency pressures could complicate the inflation outlook, making policy calibration more challenging, she added. (IANS)

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