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FM Sitharaman says RBI needs to be synchronised to handle inflation

FM Sitharaman says RBI needs to be synchronised to handle inflation

FM Sitharaman said that policies are designed in such a manner in certain economies that the monetary policy and interest rate management are the only tools to handle inflation. 

FM Sitharaman said that inflation management cannot be singularly left to monetary policy FM Sitharaman said that inflation management cannot be singularly left to monetary policy

Finance Minister Nirmala Sitharamn said that the Reserve Bank of India will have to be more synchronised with the fiscal policy and other factors to tame inflation. She said that inflation management cannot be singularly left to monetary policy, which has proven to be totally ineffective in many countries. 

The minister was speaking at a seminar organised by think tank, Indian Council for Research on International Economic Relations (ICRIER) on Thursday. After the comment, she said that she was not prescribing anything to the Reserve Bank. 

"The RBI will have to synchronise somewhat, maybe not as synchronised as other western developed countries would do. I'm not prescribing anything to the Reserve Bank... I'm not giving any forward direction to the RBI but it is the truth that India's solution to handling the economy, part of which is handling inflation also is an exercise where the fiscal policy, together with the monetary policy has to work," she said.

FM Sitharaman said that policies are designed in such a manner in certain economies that the monetary policy and interest rate management are the only tools to handle 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 and majority of which is outside of the monetary policy given in today's circumstances," she said.

The minister further said that there was a time when such a comment from the finance minister would have been considered sacrilegious. 

Also read: Inflation not a red-lettered priority, can be managed, says Nirmala Sitharaman

Published on: Sep 08, 2022, 3:17 PM IST
Posted by: anwesha madhukalya, Sep 08, 2022, 3:08 PM IST