RBI governor Shaktikanta Das says monetary policy has limits; fiscal steps needed to push demand

Updated : January 25, 2020 12:09 PM IST

Food processing, tourism, e-commerce, and startups are some of the areas that can push growth, Shaktikanta Das said.

RBI governor also suggested that states should enhance their capital expenditure, which has multiplier effect.

Shaktikanta Das said said financial stability has emerged as a key consideration of monetary policy.

A week ahead of Union Budget 2020, Reserve Bank of India (RBI) governor Shaktikanta Das said monetary policy has its limits in pushing growth and structural reforms, fiscal steps and infrastructure push are needed to boost demand.

Food processing, tourism, e-commerce, and startups are some of the areas that can push growth, Das said.

While speaking at his alma-mater St. Stephen's College, Delhi, the RBI governor added the government should focus on infrastructure spending, which can augment growth.

He also suggested that states should enhance their capital expenditure, which has multiplier effect.

“Structural reforms and fiscal measures may have to be continued and further activated to provide a durable push to demand and boost growth.”

“In my previous talks elsewhere, I have highlighted certain potential growth drivers which, through backward and forward linkages, could give significant push to growth. Some of these areas include prioritising food processing industries, tourism, e-commerce, start-ups and efforts to become a part of the global value chain.”

“The government is also focusing on infrastructure spending which will augment growth potential of the economy. States should also play an important role by enhancing capital expenditure which has high multiplier effect.”

He said financial stability has emerged as a key consideration of monetary policy. “Jury is still out on whether financial stability be added as an explicit aim of monetary policy.”

Pointing at global financial crisis, he said monetary policy is in a state of flux across the world.

RBI governor Shaktikanta Das says monetary policy has limits; fiscal steps needed to push demand

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