Soft fiscal stance to continue, says RBI

It will take a call on exiting from stimuli sooner

 
“Especially on monetary policy, we will not exit unless we are sure that recovery is secured ...but soon thereafter when we make the judgement that the recovery is secured, we have to unwind the accommodative monetary policy,” RBI Governor D Subbarao said here.

However, the governor added, the government and the RBI will have to take a call on exiting from stimuli given for perking up the slowing down economy sooner than most of the countries.

He said RBI will look at number of factors like WPI inflation, CPI inflation, components within inflation, industrial growth and credit expansion while unwinding the soft monetary policies.

“This question of exit will be upon us much sooner than most of the country. We have to take a call on supporting the recovery and stemming inflationary pressure,” he said.

Inflationary pressure

Pointing out that negative WPI inflation is statistical in nature, Subaarao said, “there are inflationary pressure this fiscal ...and CPI inflation is in double digit.”

Subbarao said he expects WPI inflation at 5.2 per cent plus by the end of the current fiscal.
Earlier, Finance Minister Pranab Mukerhee had said time has not yet come to withdraw stimulus packages provided to industries to combat the impact of the global crisis.

Even Finance Ministers and central bank governors at the recent G-20 meeting in London had agreed to continue the stimulus meaures.

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