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Centre, state governments need to cut taxes to temper fuel prices, says RBI Governor

On cryptocurrencies and risks involved in its trading, RBI Governor Shaktikanta Das in his address to Bombay Chamber of Commerce and Industry also added that the apex bank is working on a Central bank digital currency.

RBI Governor Shaktikanta Das urges Centre and State governments to cut taxes (Picture courtesy: ANI, Pixabay)

The Reserve Bank of India Governor Shaktikanta Das called upon the Central government and states on Thursday (February 25) to take a positive decision  in a coordinated manner to control fuel price hike. “I am sure state and Central government will take a positive decision in a coordinated manner, ” he said on Thursday.

He urged the Centre and State governments to work in a coordinated manner to reduce the indirect taxes which has been burning a hole in consumers pockets. The petrol and diesel prices saw a continuous hike in prices for 12 days and after a two-day pause again rose on February 23. Currently Petrol in Delhi is retailing close Rs 91, at Rs 90.83 per litre. While Diesel will now sells for Rs 81.32 per litre.

RBI Governor in his speech on Thursday highlighted that the prices are pushing the cost of items across all verticals in the economy, and a calibrated tax reduction by the Centre and states will help in controlling the price rise. “Diesel  and petrol prices do have an impact on the cost side. They play as cost-push factor across a range of activities. It’s not just that passengers who use cars and bikes. High fuel prices also have an impact on cost of manufacturing, transportation and other aspects,” he added.

On cryptocurrencies and risks involved in its trading , Shaktikanta Das in his address to Bombay Chamber of Commerce and Industry also added that the apex bank is working on a Central bank digital currency,”RBI is working on a Central bank digital currency, which far different from cryptocurrencies. We don’t want to be left behind in technological revolution. The benefits of blockchain technology need to be capitalised. We’ve certain concerns regarding cryptocurrencies,” Das added.

expressing optimism about India’s economic growth nad recovery after COVID-19 pandemic, Das said that the country will continue to attract foreign investments into its equity market. As noted by UNCTAD (2021), India’s inward foreign direct investment (FDI) bucked the global trend and grew positively in 2020, boosted by investments in the digital sector.

“In 2020-21 (April-December), net FDI to India at US$ 40.5 billion was higher than US$ 31.1 billion a year ago. India’s optimistic growth outlook and ample global liquidity also induced net foreign portfolio investment of US$ 35 billion in domestic equity market in 2020-21 (up to February 19),” he said.

According to RBI, Non-residents made higher accretion to deposits with banks in India. Consequently, the surplus on both current and capital account is reflected in build-up of foreign exchange reserves during the year. As on February 19, 2021, foreign exchange reserves were US$ 583.9 billion, an accretion of US$ 106.1 billion since end-March 2020. The external sector outlook would continue to be reshaped by headwinds and tailwinds associated with both domestic and global recovery.

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