Finance Minister Arun Jaitley on Tuesday complimented the Reserve Bank of India (RBI) for striking a balance between growth and inflation, a stance in sync with North Block. He promised to address inflationary woes, particularly food prices, through supply side measures and by going for fiscal consolidation. He also assured that the government would strive to revive the investment cycle for higher growth and employment generation.
“RBI has chosen to maintain a balance between growth and inflation while keeping the policy rates unchanged,” Jaitley said on his Facebook page.
He reiterated this was also an aim of the government. “It is a priority for the government to maintain a balance between growth and inflation,” the minister said.
Ever since Jaitley assumed office a week ago, North Block and Mint Road are singing the same tune, quite a departure from the public airing of differences between former finance minister P Chidambaram and former RBI governor D Subbarao.
RBI had allowed banks to lend more to the private sector since they would be required to subscribe less to government securities than earlier, the minister said. “It has followed a calibrated approach aimed in the direction of balancing between growth and inflation,” he added.
He said RBI had reduced the statutory liquidity ratio (SLR) by 50 basis points, while retaining the repo rate.
However, a finance ministry official said the SLR cut would have a minor impact on the liquidity situation.
The government, Jaitley said, was also concerned with restarting the investment cycle and moving towards higher growth and employment generation. “We would like to address the problem of inflation through supply side measures particularly in relation to food inflation. Fiscal consolidation is a priority for the government.”