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Journalism of Courage
The Reserve Bank of India (RBI) on Friday said that the government should have a detailed roadmap that speaks of its intent to trim the burgeoning fiscal deficit.
RBI Governor D Subbarao blamed the chronic high budget deficit as one of the factors impeding the central banks efforts to tame inflation. He was addressing three-day Global Summit opening here.
Though inflation is showing no downward trend giving little room to RBI to cut its key policy rate,Subbarao said the timing of a rate cut would hinge on global factors,crude oil prices and governments Budget announcement.
Fiscal deficit is one of key drivers of inflation. It is very important that fiscal deficit has to be brought down to help control inflation. For fiscal consolidation has to be embarked upon,we need a credible commitment from the government,said the RBI governor adding that the government had to indicate how it will meet the revenue deficit and fiscal deficit targets,and give a plan of action for taming it.
Subbarao said interest rate has peaked and inflation rate has to come down,but the timing would depend on several factors.
