Fiscal and Monetary Policies Align to Stimulate Economic Growth: FM Sitharaman
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Synopsis
Union Finance Minister Nirmala Sitharaman highlighted the harmonious collaboration of fiscal and monetary policies to drive economic growth. With signs of recovery in consumption and supportive measures from the RBI, the government aims to enhance industry competitiveness while ensuring stability in the foreign exchange market.
Key Takeaways
- Monetary and fiscal policies are synergistically aligned.
- RBI's 25bps rate cut is a significant boost.
- Coordination between RBI and government is strong.
- Consumption recovery is evident in the industry.
- Customs duty changes are planned and strategic.
New Delhi, Feb 8 (NationPress) Union Finance Minister Nirmala Sitharaman stated on Saturday that the government's monetary and fiscal policies are synergistically working together and will further enhance the expanding economy through a strong Budget and recent decisions made by the RBI.
Speaking to the media alongside Reserve Bank of India (RBI) Governor Sanjay Malhotra, FM Sitharaman emphasized that there is a solid coordination between the central bank and the government, with no overlap in their functions.
She convened with the Central Board of Directors of the RBI, joined by Union Minister of State for Finance Pankaj Chaudhary and Malhotra during the standard post-Budget discussion in New Delhi.
The Finance Minister remarked that the industry is showing signs of consumption recovery and is eager to enhance capacity utilization.
"This is a positive indication, and with the RBI’s decision to lower the report rate by 25 basis points, it can provide the necessary momentum," FM Sitharaman noted.
The 25bps rate reduction is expected to complement the consumption-enhancing measures outlined in the Union Budget for 2025-26, thereby boosting domestic demand.
Furthermore, the RBI's commitment to inject liquidity as required to mitigate any tightening of both frictional and durable liquidity will ensure the effectiveness of monetary policy transmission.
FM Sitharaman also mentioned that the changes in the basic customs duty (BCD) were not a hasty response to global events and had been planned for the past two years.
"We will ensure tariff protection as necessary for the industry while concentrating on enhancing competitiveness," she asserted.
Industry leaders express confidence that the central bank, with governmental support, will maintain stability in the foreign exchange market despite pressures from the strengthening dollar on emerging markets.
