Finance Minister Nirmala Sitharaman said on Thursday that the Reserve Bank should be more in sync with fiscal policy and other factors to tame inflation.
She said in a symposium organized by the economic think tank ICRER that managing inflation cannot be left alone to monetary policy, which has proven ineffective at all in many countries.
“The Reserve Bank of India will have to synchronize to some extent, and may not be synchronized as much as other developed Western countries might do. I am not calling the Reserve Bank anything… I am not giving any forward direction to the Reserve Bank of India, but it is a fact,” she said. India’s solution to dealing with the economy, part of which is to deal with inflation, is also an exercise in which fiscal policy, in tandem with monetary policy, must work.”
She said that there are economies in which policy is designed in such a way that monetary policy and interest rate management are the only and only tool for dealing with inflation.
“I would say that managing inflation in India, or the word for taming inflation or the word for keeping it within tolerance is a practice of many different activities and most of them are outside monetary policy given in today’s circumstances,” she said.
She said there could have been a time when people thought it was sacrilege for a country’s finance minister to say so.
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