NITI Aayog Vice Chairman Rajiv Kumar urged the finance ministry and the Reserve Bank to work in ‘close coordination’, advocating a loosening of fiscal stance if the central bank tightens monetary policy.
“If the RBI tightens the monetary policy to follow its dharma (duty), then we can compensate for that through fiscal policy. There is a need for cooperation, there is a need to have a macro-economic team in our country so that everybody works together,” he said while speaking at a book release event in Mumbai on Monday.
The 3.5 per cent fiscal deficit target, which deviates from the original fiscal consolidation road map, is not “very big”, he claimed as he affirmed that India is better placed on other macro-economic indicators like inflation, forex reserves and the current account gap.
In a veiled reference to conflicts between Mint Road and North Block, Kumar said there should not be a “this versus that” in the case of economic policy makers.
He said the Niti Aayog, the finance ministry and the Reserve Bank, along with other economic policy makers, can be a part of this “team” which works in close coordination and added that working this way can lead to faster progress.
Kumar also exuded confidence of India’s GDP growth touching the 7.5 per cent mark for 2018-19.
His remarks on better coordination between the RBI and the finance ministry come in the backdrop of public criticism mounted by both the institutions against the other after the Rs 12,900 crore PNB scam.
While the ministry had blamed the regulator for poor supervision of the bank, the latter countered that its legal options were limited and sought change in laws.
Stating that he was recently in China, he said the Communist neighbour has not moved much socially and politically, while India, a unique case which sought change on all the three crucial fronts including social, economic and political, has achieved moderate success on all fronts.
On employment creation, he said 70 lakh jobs have been generated as against the need to have 1 crore jobs and also underlined the need to look at the quality of employment, saying it should be in sync with aspirations of young Indians.
(With inputs from PTI)