Mumbai / 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 at the Union finance ministry.

Strong stand: Finance ministry’s chief economic adviser Arvind Virmani says India needs to boost infrastructure spending. Harikrishna Katragadda / Mint

Growth is expected to slow to as little as 7% this year compared with about 9% in the last four years.

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.

The following day, the government announced a $4 billion (Rs18,920 crore) stimulus package, including cutting taxes on consumer goods such as cars, televisions, motorbikes and others.

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 add to three interest-rate cuts in less than two months to shore up a slowing economy.

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