Chief Economic Advisor V Anantha Nageswaran said on Wednesday that the government and Reserve Bank of India stand ready to deal with the current global macroeconomic challenges with “flexible and skilful” policies.
Speaking at an event organized by the Ministry of Finance and the Securities and Exchange Board of India, the CEA said that while there are many short-term challenges, India’s medium-term fundamentals are strong.
“We are in a situation where we face many challenges. We must address the challenges of maintaining sustainable growth, containing inflation, keeping the fiscal balance in shape and ensuring our foreign exchange reserves remain healthy,” said Nageswaran.
Nageswaran said there are no pre-determined policies or free menu for the government to address these challenges.
“The government will meet these challenges through flexible and skilful policy making.
On Wednesday, the Reserve Bank of India’s (RBI) six-member Monetary Policy Committee (MPC) voted unanimously to raise interest rates by 50 basis points, bringing the repo rate to 4.90 percent.
While real GDP growth forecast for FY23 was kept at 7.2 percent, inflation forecast for the year was raised to 6.7 percent. The MPC noted that inflation is expected to remain above the 6 percent upper tolerance band for the first three quarters of FY23.
At the same event, Finance Minister Nirmala Sitharaman said the steps taken by the government before the pandemic, such as cutting corporate taxes, digitizing and formalizing the economy, GST and IBC, had helped India face two challenging years of the pandemic and geopolitical uncertainty deal with. and will reap dividends once the current crisis is over.
