Moody’s: Fiscal steps must balance RBI rate hikes to curb inflation

Controlling inflation is not the responsibility of the Reserve Bank of India alone and more fiscal measures are needed to....

Written by TickerNews | Published:August 20, 2010 2:15 am

Controlling inflation is not the responsibility of the Reserve Bank of India alone and more fiscal measures are needed to manage inflation as well as boost economic growth,Moody’s Analytics said on Thursday.

“A simultaneous tightening of fiscal policy would lead to less borrowing by the government and less crowding out of the private investment that will be needed to sustain expansion,” Matt Robinson,senior economist at Moody’s Analytics said.

Greater emphasis on fiscal austerity would help to slow inflation and boost the economy’s longer-term prospects,Robinson said. “The central government has shown little willingness to curb its spendthrift ways,” the Moody’s economist said.

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