Reviving growth requires better coordination between fiscal and monetary policies | The Indian Express

Reviving growth requires better coordination between fiscal and monetary policies | The Indian Express

Written by Neelkanth Mishra |Updated: April 17, 2019 7:38:21 am

The writer is co-head of Asia Pacific Strategy and India Strategist for Credit Suisse.

Reviving growth requires better coordination between fiscal and monetary policies

The constraints in the financial system have further worsened the monetary tightness. As growth continues to slow and inflation stays below the target, interest rates may keep falling, but likely not fast enough to revive growth quickly.

Even as the governments have tried to rein in spending to control the fiscal deficit, the easing this should have caused on the monetary side has not occurred.

To get one of the largest economies in the world to maintain a seven to eight per cent growth pace requires effort, in the form of continuous reforms. With election results expected in about five weeks, the discourse must now move to the reforms or just administrative steps that are imperative to stem the steady decline in momentum we have seen recently in India, and hopefully reverse it. Growth expectations for the current year have already fallen from 7.4 per cent to 7 per cent, and are likely to slip further.