Inflation Management Cannot Be Singularly Left To RBI, Says Nirmala Sitharaman
The finance minister said that the word 'taming inflation' or the word 'keeping it within the tolerance limit', is an exercise of so many different activities and a majority of which is outside the monetary policy in today's circumstances
Finance minister Nirmala Sitharaman, on Thursday, said that inflation management cannot be singularly left to the monetary policy as a majority of policies are outside its purview in the current context. The minister was speaking at a seminar organized by economic think-tank Icrier.
"The RBI will have to synchronize somewhat, may not be as much as synchronized as other western developed countries would do. I am not giving any forward direction to the RBI but it is the truth that India's solution to handling the economy, part of which is handling inflation is also an exercise where the fiscal policy, together with the monetary policy has to work," said the minister, in a statement.
As per her words, there are economies in which policies are designed in such a way that monetary policy and interest management is the only tool to handle inflation.
"I would say India's inflation management, the word 'taming inflation' or the word 'keeping it within the tolerance limit', is an exercise of so many different activities and a majority of which is outside the monetary policy in today's circumstances," the statement added.
India is highly dependent on oil-producing countries for meeting its energy needs. Reportedly, it imports 80 to 85 per cent of total energy requirements from abroad. Considering this fact, Sitharaman said that, "Buying cheaper Russian crude and gas is also a part of inflation management. Russian crude was less than 2 per cent of India's oil requirement before the Ukraine war and was ramped up to almost 12 to 13 per cent within a couple of months."
Pointing out that the inflation varies from state to state, despite the GST, creation of market and freeing movement of goods, Sitharaman said that, "Solution to handling inflation should be country-specific although the problems which add to the problem of inflation are not country-specific, it comes across from various parts of the globe, commodities that can be because of different reasons."