RBI hails fiscal measures

The RBI welcomed the Budget proposal to bring down fiscal deficit to 5.1 per cent, saying the strategy of increasing indirect taxes and capping subsidies are reliable measures to control deficit.

It, however, said this will not have any immediate bearing on its monetary policy stance.

“Budget proposals are an important consideration, and positive development, but the monetary stance is not going to be influenced by only one factor,” RBI Deputy governor Subir Gokarn said, adding the focus on increasing revenue through higher indirect tax mop up and the move to cap subsidies under 2 per cent of GDP, are a very reliable way to contain chances of fiscal slippages.

“The fiscal deficit target is a reasonable reduction in the deficit which is what we wanted to see from our standpoint. Also the fact that it is coming from the revenue side which is more controllable in terms of realisations, which also suggests that the risk of slippages are that much low,” Gokarn said.