The fiscal policy has to work with the monetary policy to handle the Indian economy well, says Finance Minister Nirmala Sitharaman
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Finance Minister Nirmala Sitharaman on Thursday said the Reserve Bank of India (RBI) needs to be more synchronised with fiscal policy and other factors in order to tame inflation.
Addressing a seminar organised by economic think tank Icrier, the FM said inflation management cannot only be in the hands of monetary policy, as many countries have failed to do likewise.
The minister said that the RBI, perhaps not as developed as Central Banks in other developed countries, will need some synchronisation. "I'm not telling the Reserve Bank anything... I'm not directing the direction to RBI. But, the fiscal policy has to work with the monetary policy to handle the Indian economy well", she said
In many economies, the policy is formulated in such a way that monetary policy and interest rate management is the only tool to tackle inflation.
"I would say India's inflation management, the word taming inflation or the word keeping it within the tolerance limit is an exercise of so many different activities, the majority of which is outside of the monetary policy given in today's circumstances", she added.