NEW DELHI: Stating that currently, the biggest risk to the global and Indian economy is premature hardening of interest rates on account of inflationary pressure, the BJP on Thursday claimed that the “prudent economic policies by the Centre” have given ample scope to the Reserve Bank of India (RBI) for monetary adjustments.
Taking swipe at the Opposition-ruled states for not reducing valued added tax (VAT) on fuel prices, the BJP said that the Centre’s decision to lower the excise duty will translate into Rs 88,000 crore into the hands of the people which will boost the consumer demands.
“Oil and commodity prices are increasing across the world, and the US inflation is at a 30 years’ high at 6.2%. It is the result of the economic policy followed by leading nations of the world in order to fight the economic fallout of Covid-19, which included large scale quantitative easing policies such as printing currency and helicopter money. These policies are now being termed as misplaced,” said Gopal Krishna Agarwal, the BJP spokesperson for economic matters.
Quoting from the monthly economic report of the Ministry of Finance -- Hardening input cost and ripple effects of escalating global crude oil prices, Agarwal said that such concerns are still not embedded into demand-side inflationary pressure in India. “We did not resort to uncontrolled fiscal deficit financing. Our government followed prudent economic policy in spite of intense pressure. The Modi government followed the calibrated approach in its economic response with staggered fiscal stimulus and focused and targeted delivery through direct benefit
transfer (DBT),” added Agarwal.
The BJP spokesperson stated that there’s fiscal elbow space after the Centre reduced excise duty on petrol and diesel significantly. “This step has been taken with objectives of keeping Inflation under control and supporting growth by boosting consumer demand.
"The government approach to inflation is such that it remains under control and there is headroom for RBI to adjust monetary policy to expand demand, which will ensure that RBI is not compelled for knee jerk reaction to suck large-scale liquidity or increase benchmark interest rates,” added Agarwal.