MORE MONEY: Limited impact of Saudi oil attack on inflation, says Shaktikanta Das
Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday said that there is little space for any fiscal expansion for the government. Das was speaking at the Bloomberg India Economic Forum in Mumbai.
On the state of the economy, he said he does not want to get into any adjectives to describe the state of the economy. "There are challenges but one has to look at the opportunities available," Das said.
The international environment, the governor said is clouded with challenging conditions. "Global growth is slowing down and central banks across the world are bracing up to counter it by easing monetary policy but there is no recession as yet," he added.
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- The government has not announced any counter-cyclical measures which will need fiscal expansion. Most of the things announced are non-fiscal, said RBI governor
- Das said he expects the US Fed's latest rate cut to boost fund inflows into the country, mostly via Foreign Direct Investment (FDI)
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"So far as the fiscal side is concerned the government has, by and large, remained prudent. They have not announced any counter-cyclical measures which will need fiscal expansion. Most of the things announced are non-fiscal," Das said.
"I think the government's fiscal space is itself very limited. The fiscal deficit is at 3.3%," he added. He said that there is a lot of discussion in the media about borrowing by PSUs. "Both put together there is already very little space so far as the fiscal is concerned," Das added. Internally, the government has to examine its expenditure vis a vis its tax collections, he suggested.
Das said he expects the Saudi crisis to have only a limited impact on the inflation and the fiscal numbers given the lower subsidy outgo. But he added that the developments after the drone attack on Saudi Oil facilities are still playing out.
Das said the rupee, so far this fiscal, has traded in a narrow range with modest appreciation in the first quarter giving way to some depreciation in August and in the first half of September, accentuated by the drone attacks on Saudi oil facilities on September 14.
Das said that he expects the US Fed's latest rate cut to boost fund inflows into the country, mostly via Foreign Direct Investment (FDI). On the rising crude rates, he said the ongoing crisis in Saudi Arabia that has spiked crude prices to multi-year highs will have a limited impact on inflation and fiscal numbers. Drone attacks on the world's largest oil refinery in Saudi Arabia, alleged to have been carried out by Iran over the past weekend, has led to a massive 20% surge in crude prices.
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