“If this is to continue for longer period of time, it is just a matter of time before the government will pass on some of the price increases,” Malhotra said at a conference hosted by the Swiss National Bank and the International Monetary Fund in Switzerland on Tuesday, as per a Bloomberg report.
Excise duties had been cut while state-run fuel retailers were absorbing the increase in crude prices as the conflict continues, he added.
Supply-chain disruptions in the region are beginning to hit India. “We have this framework of flexible inflation targeting, but in such times it’s not sufficient,” he said, adding that fiscal coordination becomes critical “if the supply shock is as big as it is.”
“We are being more and more data dependent. We are taking it more meeting by meeting,” said the RBI governor. The RBI is being flexible in its approach and is ready to look through the shock if it’s transitory, “but if it is entrenched, we need to take action,” Malhotra said.
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