RBI governor doesn’t feel that budget proposals will impact inflation

RBI governor doesn’t feel that budget proposals will impact inflation

The governor of Reserve Bank of India, Shaktikanta Das has on Saturday said that the Budget proposals are not going to have too much of an impact on inflation as the government had more or less remained within the roadmap for fiscal deficit which has been set under FRBM Act. The union budget had come out earlier in the month and had raised the target of fiscal deficit to be 3.8% of GDP for the year 2019-20 from the earlier pegged figure of 3.3% because of shortage in revenue.

Das has said that the direct impact on inflation of any budget is the number that the fiscal deficit has when there is a surge in borrowing however government has been adhering to principles of the fiscal prudence. FRBM Act’s escape clause which is the deficit number in the current year and the next year are within the set parameters of the FRBM committee recommendations.

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While addressing the media post the customary address given by the Finance Minister to the RBI board after Budget. Major reason has been the inflation rise as there is food inflation which is taking up mostly in the items such as milk, fish and other protein related items. The inflation has edged up as there is a revision of the tariffs of telecom as per him.

Consumer Price Index based retail inflation has gone up to close to a near high of six years to 7.59% in the month of January going past the comfort range of RBI particularly on the rising prices of food and vegetables.

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This is the highest it has been since the month of May in the year 2014.