Reserve Bank of India Governor Shaktikanta Das said on Monday that the Indian government is likely to stick to its fiscal deficit target as set out in the budget, and that there may not be a need to increase government borrowing just yet.
India announced a series of modifications to the tax structure on key commodities on Saturday in a bid to protect customers from rising prices amid high inflation.
The recent steps, according to experts, will undoubtedly raise fiscal concerns and raise doubts about the government's ability to fulfil its deficit target of 6.4 percent of GDP for 2022-23.
Governor Shaktikanta Das said the government's fiscal and monetary authorities were working together to keep inflation under control, which has remained considerably above the central bank's authorised target range of 2-6 percent.
The RBI Governor, on the other hand, feels there is no one-to-one relationship between increased government spending and the need for extra borrowing, and that the government is dedicated to fulfilling its fiscal deficit target.