India’s monetary policy should be more aggressive: Virmani

India’s monetary policy should be more aggressive: Virmani

New Delhi: India’s monetary policy should be more aggressive than it has been until now to counter financial shocks, said Arvind Virmani, chief economic adviser to prime minister Manmohan Singh in New Delhi on Wednesday.

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/Content/Videos/2008-12-18/1712_Virmani_Monetary policy_Pkg_MINT_TV.flv9d8fc458-cc50-11dd-8938-000b5dabf636.flvIndia, which needs to boost infrastructure spending to shore up slowing growth, will respond appropriately to the current slowdown, Virmani added.

To counter the slowdown and revive demand, the central bank on 6 December lowered its benchmark repurchase rate to 6.5% from 7.5%, the third cut since October.

A day later India announced a $4 billion economic stimulus package.

The government announced targeted measures to help exporters, small businesses and textile manufacturers, a plan to expand mortgage lending and a cut in a valued-added tax.

India’s inflation slowed to a seven-month low of 8% in the week to 29 November from a year earlier after gaining 8.4% in the previous week, making it more likely the central bank will take stricter monetary measures to shore up a slowing economy.