New Delhi. Reserve Bank of India (RBI) Governor Shaktikanta Das stressed the need for structural and more financial measures to increase consumption demand and the pace of gross economic growth. Das said that monetary policy has its limits to achieve these objectives. The Narendra Modi government is going to present the second budget of its second term on February 1. The General Budget is being presented at a time when the nominal growth rate of Gross Domestic Product (GDP) in the current financial year will come down to a 48-year low of 7.5 percent in the current financial year.
The year is expected to remain at five percent. While addressing the students of St. Stephen's College, Das said that monetary policy has its limits. Structural reforms and fiscal measures should continue to increase demand and encourage growth. Das has been a student of this college. The economic growth rate in the September quarter has come down to a six-year low of 4.5 percent. This statement of Das is being seen in this perspective.
It is noteworthy that in the second term of the Modi government, the growth rate is coming down on a quarter-on-quarter basis. In view of the reduction in inflation based on the Consumer Price Index, the central bank has reduced the policy rate from 1.35 per cent to 5.15 per cent four times during February to October, 2019. This is a nine-year low of the repo rate. Das also mentioned some areas where structural reforms are necessary. He said that if these reforms are taken forward rapidly, they can be helpful in furthering the growth.
He advocated giving priority to food processing industry, tourism, e-commerce and startups under the global value chain. That Das said that states can play an important role by increasing investment. Because of all these conditions, the Reserve Bank has reduced its growth rate estimate from 2.9 per cent to five per cent between February and December.