The Indian government should focus on development, as per a research paper by RBI. The paper shows that the general government debt-GDP ratio could decline to 73.4% by 2030-31, 5 percentage points lower than the IMF s projection. Further fiscal tightening is needed for sustainable growth.
The empirical findings of the study broadly confirm higher threshold inflation and higher growth in emerging market economies than in advanced economies. (Representative image)
MUMBAI: A Reserve Bank of India (RBI) study has advocated a mix of fiscal and monetary policies to mitigate economic downturn, saying demand side channel needs to be complemented with a conducive monetary transmission mechanism from the supply side.
Referring to the 2009 crisis, the study by Development Research Group (DRG) on Risk Premium Shocks and Business Cycle Outcomes in India , said that at the micro-level, the interest rate spread, attributed to risk premium on loans, increased in response to a rise in loan defaults during the post-2009 period.
A Reserve Bank of India (RBI) study has advocated a mix of fiscal and monetary policies to mitigate economic downturn, saying demand side channel needs to be complemented with a conducive monetary transmission mechanism from the supply side. Referring to the 2009 crisis, the study by Development Research Group (DRG) on Risk Premium Shocks and Business Cycle Outcomes in India , said that at the micro-level, the interest rate spread, attributed to risk premium on loans, increased in response to a rise in loan defaults during the post-2009 period. Also, the credit growth was found to be negatively associated with the loan default rate, indicating that a shock to the borrowing sectors has a significant negative impact on credit growth, it added.
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