FISC FIRMLY IN CONTROL, INVEST MORE IN INDIA, PM TELLS AIIB
PM Narendra Modi on Tuesday pitched for greater long-term investment from the Asian Infrastructure Investment Bank and said the country’s macroeconomic fundamentals are strong, with the fiscal situation firmly in control and inflation within a mandated range. Later, addressing a gathering of Corporate India’s leaders in Mumbai, Modi asked them to create more jobs by investing in the housing, micro-irrigation, battery storage, defence, and agri sectors
Prime Minister Narendra Modi on Tuesday said the fiscal situation in India is firmly under control and the government is committed to fiscal consolidation. India’s external sector is robust with foreign exchange reserves in excess of over $400 billion, providing stability and confidence to invest in the country, Modi said during the opening ceremony of the third annual meeting of Asia Infrastructure Investment Bank (AIIB) in Mumbai.
The Government aims to reach the Fiscal Deficit target of 3.3 per cent of GDP in BE 201819. The Medium term Fiscal policy statement projects a fiscal deficit at 3.1 per cent of Gross Domestic Product (GDP) for 2019-20 (FY20) and 3.0 per cent of GDP in FY 201-21 (FY21).
Modi said the macro-economic fundamentals are strong with stable prices, a robust external sector and a fiscal situation firmly in control. Despite rising oil prices, inflation is within the mandated range. Retail inflation, measured by Consumer Price Index, has remained above four per cent since November 2017.
The government has mandated the Monetary Policy Committee (MPC) under the Reserve Bank of India (RBI) to restrict the retail inflation at four percent, while supporting growth. In its monetary policy review in June, MPC hiked the key policy rate (repo rate) by 25 basis points to 6.25 per cent to contain inflationary expectations. The RBI had refrained from revising the repo rate since August 2017.
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