Fri, Sep 18 2015. 06 46 PM IST
Sinha says the global economy is trying to find a balance between slower economic growth in China and faster expansion in the US
New Delhi: A day after the US Federal Reserve decided not to raise interest rates, minister of state for finance Jayant Sinha said on Friday that the global economy is trying to find a balance between slower economic growth in China and faster expansion in the US, bringing volatility to financial markets.
“I think the statements from (the Fed) chairman (Janet) Yellen indicate that she and the Fed believes that there is going to take some time for these adjustments to happen, for the asset prices and financial markets to deal with this new reality and once that settles down, the Fed will have a clearer picture in terms of what they need to do,” he said.
Sinha was speaking on the sidelines of a national conference organized by the Public Affairs Forum of India, a forum with representation from large and medium-size transnational Indian and foreign companies in the field of public affairs, on Friday.
The minister said that with inflation declining and the US Fed providing a boost to the emerging markets by not raising rates which will check money outflow, India is in a favourable environment for monetary policy action by the Reserve Bank of India (RBI).
On a possible rate cut by RBI, which is scheduled to hold its next monetary policy meeting on 29 September, Sinha said that will depend on how the central bank and governor Raghuram Rajan process various factors and decide the course of policy.
The central bank has reduced interest rates by 75 basis points in the current year but did not cut rates in its policy review in August.
On a separate note, the minister said that the direct benefit transfer will enable the government to reduce leakages and ensure that subsidies reach their intended beneficiaries.
“It is a tremendous opportunity for us as we put this DBT platform, including the Jan Dhan accounts, Aadhaar and mobile, which will be able to ensure that the entire approach to subsidy is much more efficient,” he added.
A Supreme Court ruling on 11 August has restricted the use of the Aadhaar number to distribution of cooking gas cylinders, kerosene and foodgrain through the public distribution system.