Mumbai, June 16: Amidst expectations of interest rate cut by the Reserve Bank on Monday, Finance Minister Pranab Mukherjee today expressed confidence that the central bank would “adjust the monetary policy” to address the challenges before the economy.
“The RBI is one of the most respected monetary authorities... I am confident they (RBI) will adjust the monetary policy as we are adjusting fiscal policy,” the Finance Minister said at an Assocham conference on financial sector here.
In his first public address after being nominated as the UPA candidate for the Presidential elections due next month, Mukherjee listed slow growth, high fiscal and current account deficits, inflation and negative sentiments as challenges facing the economy.
The government, he said, is taking fiscal measures to ensure that the central finances remain strong in wake of “difficult times” and expects the RBI to take monetary steps.
On Eurozone crisis, Mukherjee said, India is as concerned as others whether Greece will remain part of the currency union, as the developments are also impacting value of rupee. Rupee has lost against dollar by about 20 per cent in the last one year.
On concerns over fiscal deficit, he said, “we are taking steps, not sitting idle...if federal finances become weak, nobody will be able to bail out Indian economy.”
As regards the apprehensions expressed by global rating agencies, he said, “as Finance Minister I cannot ignore ground reality, apprehensions of Indian industry and credit rating agencies”.
His comments follow warning by global rating agency, Standard & Poor's that India's credit rating may be downgraded to below investment grade.