COORDINATED ACTION NEEDED TO CURB FUEL PRICES, SAYS RBI
Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday said there is a need for coordinated action between the Centre and state governments to reduce taxes on petrol and diesel prices since there are “inherent taxes levied by both”.
Das, however, added that both the Centre and states have their revenue pressures and are required to spend money to help the country come out of the Covid-19 pandemic stress.
“So the revenue requirement and the compulsion of the governments are fully understood. But having said that, the impact on inflation also is something, which comes in from the fact that petrol and diesel prices do have an impact on the cost of manufacturing, production…,” he said at an event organised by Bombay Chamber of Commerce.
Separately, Union finance minister Nirmala Sitharaman, too, said the Centre and states should talk to each other over reducing taxes on diesel and petrol, whose prices have risen sharply in recent times.
“No hiding of the fact that the Centre gets revenue from it. Same is the case with states. I agree that there should be less burden on the consumers.
“For that, both the Centre and states should talk with each other,” she said during an interaction with the students of the Indian Institute of Management-Ahmedabad (IIMA).
MUMBAI: Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday said there is a need for coordinated action between the centre and state governments to reduce taxes on petrol and diesel prices.
“There is a need for coordinated action between the centre and the states because there are inherent taxes levied by both,” the governor said, adding that calibrated reduction of taxes is important.
He, however, said both the centre and the state governments have their revenue pressures and they are required to spend high sums of money to enable the country and the people to come out of the Covid-19 pandemic stress.
“So the revenue requirement and the compulsion of the governments are fully understood. But having said that the impact on inflation also is something, which comes in from the fact that petrol and diesel prices do have an impact on the cost of manufacturing, production…,” the Governor said at an event organised by Bombay Chamber of Commerce.
On the central bank’s digital currency, Das said a lot of work is going on internally in the RBI and some broad guidelines and approach papers will be released on it soon.
The governor said RBI has certain concerns on crypto currencies and it has already been communicated to the government.
He said RBI is looking into strengthening the regulatory architecture for asset reconactivity struction companies (ARCs).
“(We are) refining and further upgrading the regulatory architecture in respect of the ARCs to ensure that they have a skin in the game, and they are very much in business is receiving a lot of attention from us,” Das said.
On setting up of ARC for non-performing asset (NPA) management, as announced in the Budget 2021, he said, “(in) no way will it jeopardise the of the existing ARCs” The governor said there is growing realisation and awareness among banks to dealing with bad assets and they are proactively making provision in their books for stressed assets.
He said RBI has sharpened and deepened its supervisory methods and is doing deep dive into areas of banking which were not done earlier.
“We have a precise idea of build-up of stressed assets in banks and as soon as we see a sign of stress, we immediately enter into a discussion with the banks and proactively deal with the problems,” he said.
Das also asked public and private sector banks to improve their credit appraisal processes and take measures to stop evergreening of loans.
He emphasised that the country’s financial sector currently is in a far much better place than it was earlier.
THERE IS A NEED FOR COORDINATED ACTION BETWEEN THE CENTRE AND THE STATES BECAUSE THERE ARE INHERENT TAXES LEVIED BY BOTH, SAYS DAS