New Delhi, Feb 3 (IANS): Finance Minister Nirmala Sitharaman is scheduled to address the Reserve Bank of India's central board on February 8 in a post-budget meeting to coordinate the fiscal and monetary steps required to accelerate GDP growth.
The customary meeting will take place a day after the RBI announces its monetary policy review amid expectations that it may cut interest rates for the first time in five years to spur growth as inflation has eased.
The Finance Minister has decided to stick to the fiscal consolidation path with a reduction in the fiscal deficit target to 4.4 per cent of GDP for 2025-26 from 4.8 per cent earlier, which has reduced the need for market borrowing by the Government.
This leaves more headroom for the RBI to adopt a soft money policy to spur growth and the Finance Minister is expected to drive home this point at the meeting. The new RBI Governor, Sanjay Malhotra, is a former Finance Ministry official and has already announced the injection of Rs 1.5 lakh crore in the banking system as the liquidity situation had become tight in the financial sector.
The Finance Minister has reduced its net market borrowings estimate for the 2025-26 financial year to Rs 11.54 lakh crore which will leave more money in the banking system for giving out loans to corporates for investment and spur demand through consumer spending to accelerate growth.
According to senior officials, both the fiscal measures announced in the budget and the RBI’s monetary policy will be aligned to accelerate growth along with price stability.
The Budget has rolled out significant income tax cuts for the middle class as 1 crore individuals earning up to Rs 12.75 lakh a year will not pay any tax and will have more money in their hands to spend on goods and services. This will add to aggregate demand in the economy, giving a fillip to growth.
The RBI is expected to ensure adequate liquidity in the economy and moderation in interest rates to back up the fiscal measures in the Budget to propel the economic growth rate and create more jobs and incomes.