LD-RBI-DAS-GROWTH

Low inflation,falling growth leave more room for rate cut: Das
(Eds: Adding more quotes from the governor)
    Mumbai, Sep 19 (PTI) The government has limited fiscal
space to support growth, but low inflation can help the
monetary authority ease policy rates further and help boost
the economy that has badly lost its momentum, governor
Shaktikanta Das said Thursday.
    Government measures to boost growth are more on the
administrative side and it has been fiscally prudent in its
moves, Das said, adding there can be more such off-balance-
sheet measures from New Delhi in the offing.
    It can be noted that GDP slipped to a six-year low of
5 percent in the June quarter, which led the government to
announce some booster doses in three installments so far.
    Courtesy the space created by low-inflation, the RBI
has already cut rates four times to the tune of 110 bps this
year to push growth.
    "Today, when we see that the price stability is
maintained and inflation is much below 4 percent and is
expected to be so in the next 12 months horizon, there's room
for (more) rate cuts, especially when growth has slowed down,"
Das said, speaking at an event organised by Bloomberg News
here this evening.
    However, he refused to share RBI's revised growth
projection, stating that it will go public with the revised
numbers at the next monetary policy announcement on October 4.
    Das reiterated there are many areas of opportunity
amid the "challenging" environment and called for focusing on
the same without getting mired in negative sentiments.
    He also said the recent issues on the oil front,
especially after the drone attacks on the largest Saudi
Arabian facility and resultant drop in capacity by a tenth,
will not have a negative effect either on the domestic
situation, including the fiscal balances or inflation as well.
    It is possible to contain the impact on the fiscal
math as most fuel prices are now linked to market prices, thus
capping the fiscal burden to the minimum, he said.
    Das said there is a need for a "nuanced understanding"
on the fiscal measures, stating that sometimes better spending
of the expenditure can deliver the desired benefits without
really entailing additional expenditure burden.
    As government goes through a raft of growth enhancing
measures, Das advocated front-loading of its capex plans in
the budget to help the economy.
    Commenting on the fiscal balances, he said the space
enjoyed by the government to boost growth is "limited".
    "Fiscal deficit is at 3.3. There are lots of
discussions about the borrowings by PSUs. Both put together
there is already very little fiscal space for fiscal
expansion," the governor said.
    The measures announced through the three announcements
are "non-fiscal" and administrative in nature, where the
government is streamlining certain things to help boost the
growth numbers, Das said.
    Apart from this, the government also needs to assess
its internal position which is visible through inputs like tax
collections and expenditure management, he said.
    It can be noted that there is a huge pressure on the
revenue side, with the numbers indicating advance tax
collections have grown by less than 5 percent in the first
half of the year against a full year target of 17.5 percent, a
senior tax official told PTI.
    Reiterating the need to have structural reforms in
sectors like land records, labour and agriculture, Das said
there is an immediate need to either repeal or substantially
amend the APMC Acts in several states.
    Das underlined that the government has initiated many
structural reforms to address the issues.
    He also said the RBI's interventions on the rupee are
to contain the volatilities and have been on either sides in
the last few months, which have helped the country being taken
off the US list of currency manipulators. PTI AA
BEN BEN

(This story has not been edited by THE WEEK and is auto-generated from PTI)