Mumbai: The RBI said the Centre and states should stick to the fiscal deficit target as any slippage will have an adverse bearing on inflation and increase market volatility. In its fourth bi-monthly monetary policy for the fiscal, the RBI made a strong case for improving domestic macro economic fundamentals to neutralise the impact of global trade tension and rising oil prices. “…Should there be fiscal slippage at the centre and/or state levels, it will have a bearing on the inflation outlook, besides heightening market volatility and crowding out private sector investment,” the RBI said. Finance Minister Arun Jaitley has, however, assured that the government will stick to the fiscal deficit target and there will not be any slippages.
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