Budget unlikely to have inflationary impact: Das

Govt has adhered to principle of fiscal prudence, he says

>New Delhi, February 15

RBI Governor Shaktikanta Das on Saturday said the Budget proposals would not have much inflationary impact as the government had by and large remained within the fiscal deficit road map set under the FRBM Act. The Union Budget earlier this month raised the fiscal deficit target to 3.8 per cent of the GDP for 2019-20, from the 3.3 per cent pegged earlier, due to revenue shortage.

“The direct inflationary impact of any Budget is fiscal deficit number, when borrowing goes up, but the government has adhered to the principle of fiscal prudence. The ‘escape clause’ under the FRBM Act, the deficit number in the current year as well as the next year are very much within the parameters set as per FRBM committee recommendations,” Das said.

He was talking to the media after the customary address of the Finance Minister to the RBI central board post Budget. “The key reason for rise in inflation is because of food inflation, mostly milk, fish, and various protein-related items. Core inflation has slightly edged up because of revision of telecom tariffs,” he said.

Retail inflation based on the consumer price index (CPI) soared to a near six-year high of 7.59 per cent in January, surpassing the RBI’scomfort range, primarily on account of rising vegetable and food prices. This was the highest rate of inflation since May 2014, when it came in at 8.33 per cent.

On inclusion of core inflation in the monetary policy framework, Das said, “Already an internal review process is on. At the appropriate time, if required, we will have a discussion with the government.” Asked if the board considered payment of interim dividend to the government, the Governor was non-committal. “We are uploading minutes of RBI’s central board meeting. If any decision is taken, it will be uploaded on the website,” he replied.

On moderating credit growth, Das said there were signs of uptick and the momentum was gathering pace.

“Credit flow is slowly and steadily reviving and thanks to the various measures announced in the Budget and in the run-up to the Budget, we do hope and expect the credit flow to improve in the coming months.” Speaking on alignment of RBI’s accounting year with financial year, Das said, “It is under consideration.”

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BOXES

Telcos: Internal discussions, if need be

-The RBI Governor said the Central Bank would have internal discussions in case there were any issues arising out of the SC order regarding adjusted gross revenue dues to be paid by telecom companies

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Monitoring farm credit, says Nirmala

-Finance Minister Nirmala Sitharaman said the government was monitoring farm credit given by banks in rural areas and that she expeced to meet the increased target of Rs 15 lakh crore for the next fiscal