Room for more rate cuts: RBI Governor

Mumbai, September 19

After surprising everyone with four successive rate cuts this year, RBI Governor Shaktikanta Das today said “there is more room” to do so given the growth deceleration and stable inflation that is likely to stay below target for a year or so.

However, the Governor was quick to add that there is little fiscal space for the government to unveil any countercyclical measures to boost the sagging growth and the only way to revive the growth engine is to front-load the budgeted capex, hinting that only an easy money policy can help salvage the situation.

Since assuming charge mid-December, the Das-led rate-setting panel has delivered four successive rate cuts, with the fourth one last month being the most surprising as he chose to deliver a 35 bps repo cut. With that the RBI has delivered a cumulative 110 bps repo reduction since February, yanking down the key benchmark rate to a nine-year low of 5.40 per cent.

“When we see the price stability is maintained and inflation is much below the 4-per cent mandate and is expected to be so in the next 12 months, there’s a room for more rate cuts, especially when growth has slowed down,” Das said at an event this evening. On calls from industry for fiscal measures in the form of tax cuts, Das said: “The government must front-load the budgeted spending.” — PTI

Plan to enhance direct tax mop-up

The Centre is reworking strategy to boost revenue collection from direct taxes which has been lagging behind so far, a senior CBDT official said. “Growth in direct tax collection has been less than expected. The Central Board of Direct Taxes will look into this and rework its strategy,” said a CBDT member.

Collection target this fiscal year

• Corporate tax Rs 7.66 lakh cr
• Income tax Rs 5.69 lakh cr 
• Total        Rs 13.35 lakh cr

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