Mumbai: 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 on Thursday.
"The fiscal deficit is at 3.3. There are lots of discussions about the borrowings by PSUs. But, all things put together, there is very little fiscal space for fiscal expansion," the governor said.
But the government needs to assess its internal position which is visible through inputs like tax collections and expenditure management, he added.
Das, however, refused to share the RBI’s revised growth projections and said that it will go public with the revised numbers in the next monetary policy announcement on October 4.
He said the government measures to boost growth were more on the administrative side, adding that more such off-balance-sheet steps could be in the offing.
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 Saudi facility and resultant drop in capacity by a tenth, will not have a negative effect.
It is possible to contain the impact as most fuel prices are now linked to market prices, thus minimising the fiscal burden. He also reiterating the need to have structural reforms.