Amid concerns over economic slowdown, RBI chief Shaktikanta Das on Saturday said credit growth momentum is picking up and ruled out any possible spike in inflation due to Budget proposals as the government is maintaining “fiscal prudence”.
After the first meeting of the RBI board post 2020-21 Budget presentation, Das also expressed hope that transmission of rate cuts would improve further. The meeting, which was also addressed by Finance Minister Nirmala Sitharaman, discussed various Budget proposals.
“The direct inflationary impact of any budget is fiscal deficit number, when borrowing goes up, but the Government has adhered to the principle of fiscal prudence.
“The ‘escape clause’ under FRBM Act, the deficit number in the current year as well as the next year are very much within the parameters set as per FRBM committee recommendations,” Das said.
Facing revenue shortage, the government raised the fiscal deficit target to 3.8 per cent of the GDP for 2019-20 in the Budget, from the 3.3 per cent pegged earlier.