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Informist, Thursday, Nov. 20, 2025

 

--MPC Bhattacharya: Importance of monetary, fisc coordination has increased 

--CONTEXT: MPC external member Saugata Bhattacharya speaks at event in Delhi 

 

NEW DELHI – Coordination between monetary and fiscal policymakers is more important now than it was earlier in the face of myriad global challenges, Monetary Policy Committee member Saugata Bhattacharya said Wednesday. This is especially true in the backdrop of several developed economies having increased outlays over the past two years, he said.

 

On the Reserve Bank of India and its MPC, the external member highlighted the flexibility of the inflation targetting framework adopted by the central bank to respond to all macroeconomic conditions. The RBI targets CPI inflation at 4% with a target range of 200 basis points on either side. Retail inflation fell to a record low of 0.25% in the latest reading for October and has been below the lower bound of the target range in three of the last four months.

 

He also spoke about the possibility for more concentric regulation in India as part of monetary policy. Banks and other financial institutions have diversified and regulators like the RBI, Securities and Exchange Board of India, and Insurance Regulatory Development Authority of India among others are focused on their own verticals of supervision.

 

"The FSDC (Financial Stability and Development Council)...is an attempt to coordinate between the various financial sector regulators," Bhattacharya said Wednesday at a public policy event at the Delhi School of Economics. "But we need to ask whether the financial regulatory structure needs to change."

 

Speaking at the event, 16th Finance Commission member Soumya Kanti Ghosh said that a material rise in indirect tax collections could help the government "cross-subsidise" and bring down direct tax. Monetary Policy Committee external member Ram Singh said he disagreed with bringing down direct tax while indirect tax collections rose. The government exempted income tax on those making up to INR 1.2 million in the Union Budget for 2025-26 (Apr-Mar), before overhauling its indirect tax regime by rationalising goods and services tax slabs to only two slabs from four.  End

 

Reported by Aaryan Khanna

Edited by Akul Nishant Akhoury

 

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