New Delhi, Oct 27 (Inditop.com) Finance minister Pranab Mukherjee Tuesday ruled out any roll back of the stimulus package in a hurry and welcomed the stance taken by the central bank in its second quarterly review of the monetary policy.
“Until the economy is on a firm recovery path, the stimulus will continue,” Mukherje told reporters outside his North Block office here, giving his reactions to the monetary policy review.
“I agree with the assessment of the Reserve Bank,” said the finance minister, after the central bank raised the statutory liquidity ratio by 100 basis points to 25 percent while keeping all other policy rates and reserve ratios unchanged.
Mukherjee, however, said that while the central bank has projected the economy to grow at 6 percent, he was more comfortable with the assessment of 6.25-6.75 percent made by the Prime Minister’s Economic Advisory Council.
The minister said the monetary policy review by the central bank was on expected lines with no major change in key rates, and would work in tandem with the fiscal policy of the federal government.
“Both fiscal and monetary policy are in close conformity with each other,” Mukherjee said in his initial reactions after the policy review was presented by Reserve Bank of India Governor D. Subbarao in Mumbai.
“The rates had been discussed with the Reserve Bank earlier. The Reserve Bank governor had met me a few days ago. He met me on Friday. We had discussed and he indicated there would be no change in the rates,” the finance minister added.
Finance Secretary Ashok Chawla also said the policy stance unveiled by the central bank was precisely what the government was hoping for, given the current state of play in the country’s monetary and fiscal space.
“These decisions were something important which must be praised by policymakers.”
In the review, the central bank expressed particular concern over rising prices, especially on food, and raised its projection on inflation to 6.5 percent at the end of this fiscal from the earlier forecast of 5 percent.
Mukherjee said he also expected a fall in the kharif (winter crop) output. “But the existing stock will be sufficient.”
