The Reserve Bank has welcomed the Union Budget’s proposal to bring down the fiscal deficit to 5.1 per cent.
It said the strategy to increase indirect taxes and cap subsidies were reliable measures to control the deficit.
It, however, said this will not have any imm-ediate bearing on the central bank’s monetary policy stance.
“Budget proposals are an important consideration, and positive development, but the monetary stance is not going to be influenced by only one factor”, deputy governor Subir Gokarn said.
He said the focus on increasing revenue th-rough higher indirect tax mop up and the move to cap subsidies under 2 per cent of GDP, are a very reliable way to contain chances of fiscal slippages.
“5.1 per cent is a reasonable reduction in the deficit which is what we wanted to see from our standpoint,” Mr Gokarn said.