Fuel excise tax reductions are positive to inflation control: RBI Governor

Governor of the Reserve Bank of India Shaktikanta Das said on Wednesday that the central government's recent move to reduce excise duty on fuel and petrol is significantly positive for inflation

He claims that food inflation is now under control, but that core inflation remains high. "The reduction in excise duty on gasoline and diesel has a substantial inflationary impact," Das remarked. Inflation in India is primarily caused by supply-side factors, which the government has handled, he said.

The government has addressed supply-side problems, primarily with regard to pulses and edible oils, and more recently with regard to gasoline and diesel. All of this points to a favourable inflation future."Food inflation appears to be under control, for the most part, Das said. So far, core inflation in India has stayed elevated, which is a policy issue, and we are keeping a very careful eye on the path of core inflation, he said. Fuel inflation has also been high, and the RBI is keeping a close eye on it, he added.

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