RBI warns against loosening fiscal deficits

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New Delhi, Jan 30 (ANI): Reserve Bank of India Governor Raghuram Rajan has warned that straying from fiscal consolidation and easing up on the fight against inflation would jeopardise the country’s economic stability at a time of global market turmoil. Rajan said loosening its focus on the inflation or the fiscal deficit risked pushing India onto a path similar to Brazil’s. Rajan stressed on the need to stick to the fiscal consolidation, noting that the recent power industry reforms passed by Prime Minister Narendra Modi’s regime could force the state governments to absorb 75 percent of the 4.3 trillion rupees held by its utilities and could inflate the country’s debt levels. Rajan also warned about the dangers of changing the current policy of targeting consumer inflation of 2 to 6 percent, which the RBI formally adopted last year.

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