Govt looks forward to RBI to support growth revival: FinMin

The RBI said on Tuesday ‘if the current inflation momentum and changes in inflationary expectations continue, and fiscal developments are encouraging, a change in the monetary policy stance is likely early next year’.

With Reserve Bank of India keeping interest rates unchanged, government on Tuesday said it is looking forward to the central bank to support revival of growth and employment.

In a statement, the Finance Ministry said it was encouraging that RBI has taken note of the structural change in the outlook for inflation.

"The government looks forward to the RBI supporting the revival of growth and employment," the statement said.

Referring to the proposed new monetary policy framework, it said in the weeks ahead, government and RBI will work towards it.

The framework would ‘help institutionalise the gains achieved on the inflation front, so as to reduce inflationary expectations and further support the revival of investment and growth", the ministry added.

Earlier in the day, RBI Governor Raghuram Rajan said talks with the government have progressed well and the details will be announced soon.

The new monetary policy framework involves setting of a formal inflation target and accountability to deliver on the same. The RBI has set the inflation target for January 2016 and beyond at 4 per cent, plus or minus 2 per cent.

In its policy review, the RBI said ‘if the current inflation momentum and changes in inflationary expectations continue, and fiscal developments are encouraging, a change in the monetary policy stance is likely early next year, including outside the policy review cycle’.

RBI on Tuesday kept interest rates unchanged for fifth time in a row and the repo rate continues to be at 8 per cent while the cash reserve ratio has also been retained at 4 per cent.

Economic growth slowed to 5.3 per cent in the second quarter of current fiscal, from 5.7 per cent recorded in April-June quarter.