Reacting to the 25 basis point increase in repo rate by the Reserve Bank of India (RBI), former Finance Minister P. Chidambaram said the move shows that the RBI doesn’t “ believe” in the government’s projection on inflation and fiscal deficit.
Repo rate refers to the rate at which the central bank lends to commercial banks, and usually, the repo rate is hiked to control inflation. In a series of tweets, Mr. Chidambaram said he had predicted such a move. “Back-to-back increases because RBI does not believe government’s projections on inflation and fiscal deficit,”said the former Finance Minister.
“RBI wishes to contain inflation as well as discourage government from exceeding the borrowing target in an election year,” Mr. Chidambaram said. Congress communication chief Randeep Surjewala too attacked the Modi government over “mismanagement” of the economy and cited a Ministry of Finance reply to a Parliamentary question which said that in 2017 alone, 19 public sector banks had non-performing assets (NPAs) to the tune of ₹1.54 lakh crore.