RBI governor Shaktikanta Das (File photo)

MUMBAI: Reserve Bank of India (RBI) governor Shaktikanta Das has called for fiscal policy to work in coordination with monetary policy, even as another member of the monetary policy committee (MPC) called for relaxing the fiscal deficit target for the current fiscal.

The RBI on Thursday released the minutes of the MPC meeting held earlier in December, where all members unanimously voted for keeping interest rates on hold.

The central bank ’s concern over growth has also been brought out in a recent statement by Das in media reports where he has been quoted as saying, “If you see today’s overall economic numbers and other aspects, I think the conditions are quite appropriate for invoking that particular clause (allowing a breach in fiscal deficit target) in the FRBM Committee’s report.”

Das was quoted saying this in an interview published on Thursday. “To what extent the government will invoke it, and whether they will invoke it, is a call which the government has to take.”

According to the minutes of the MPC meeting, member Ravindra Dholakia said, “Generally, the stabilisation policies like fiscal and monetary policies should be counter-cyclical and not pro-cyclical. The fiscal discipline target of 3% of GDP under such circumstances should not be overemphasised and can be temporarily ignored,” he said.

According to Das, while onion prices could taper, prices of pulses and cereals was a concern. “Overall, several uncertainties cloud the growth-inflation outlook. First, the surge in food inflation in last three months, driven up by a spike in onion and other vegetable prices, could be transitory. It is likely to reverse gradually as late kharif output comes to the market,” he said.

