RBI, Central Govt On The Same Page Over Continuance Of Pandemic-Era Stimulus

The Reserve Bank of India (RBI) and the Union Finance Ministry are in agreement over continuing with the pandemic-era stimulus.

“The emphasis on building health infrastructure will continue,” Union Finance Minister Nirmala Sitharaman was quoted by the Bloomberg recently. It indicated that the government will keep on spending on capital expenditure and infrastructure for the same.

Similarly, RBI deputy governor Michael Patra led the group that prepared the central bank’s state of the economy report that emphasised continuing on with the support on the policy front for a longer period of time to bring about a sustainable and inclusive recovery.

Reportedly, the RBI believes that the outlook concerning prices have improved and hence will withhold acting early and damaging the economy irrespective of global concerns over inflation.

“Premature tightening could bring about the stagflation that all fear, quashing growth just as the economy is recovering,” the RBI’s paper read, as reported by the Times of India.

It added, “In an influential view, history is thick with examples of central banks under-doing it — underestimating the need for continuing stimulus.”

On the other hand, Sitharaman explained that the central government is working towards executing the initial public offering (IPO) of the Life Insurance Corporation (LIC) by March 2022. She assured that any delay on the same won't be caused due to a lack of political will.