The Reserve Bank of India monetary policy committee (MPC) is set to meet on February 7, the first meeting after the interim budget.
The last inflation reading was a benign 2.19 percent. But the budget has fiscal stimulus written all over it. So what should RBI MPC do? Does it have space for a cut?
The CNBC-TV18's Citizens’ Monetary Policy Committee of Pronab Sen, former principal adviser, Planning Commission; Samiran Chakraborty, chief economist at Citi Group; Sajjid Chinoy, chief India economist, JPMorgan; Soumyo Kanti Ghosh, group chief economic advisor, SBI and Sonal Varma, MD and chief India economist, Nomura, discuss the upcoming MPC meeting.
Varma said that the risk to growth forecast is to the downside, the fiscal side is a concern at the margin but on average inflation should still stay within 4 percent target.
Talking about fiscal stimulus, Chakraborty said, “The final purpose of stimulus is to get food from deflation to inflation at some point during the course of the year because if that does not happen then the whole package is practically useless.”
On core inflation front, Chinoy said, “Over the next three quarters we expect inflation meaningfully below 4 percent.”