New Delhi: RBI Governor Shaktikanta Das on Thursday said that high fuel prices impact manufacturing, transport, and other aspects besides affecting cars and bike users. Speaking at the 185th Foundation Day Celebration of the industry body Bombay Chamber of Commerce (BCC), he said that diesel and petrol prices impact the cost side.
"They play as a cost-push factor across a range of activities. It's not just passengers who use cars and bikes. High fuel prices also have an impact on the cost of manufacturing, transportation, and other aspects."
Advising the central and the state governments to cut taxes, Das said, there is a need for coordinated action by the Center and States to reduce taxes because both of them are levied on indirect taxes. "We realize that the States and Center have their revenue pressures and require high sums of money to enable the country and people to overcome COVID stress," Das said, adding that he was confident that states and the Centre will take a favorable decision in a coordinated manner.
Regarding India's growth, Das said, India is at the cusp of a turnaround in fortunes with sectors recovering from Covid-induced slowdowns, especially the manufacturing industry has shown good recovery, spearheading growth.
According to Das, the MSME sector in India has emerged as the economy's growth engine, and the corporates need to invest more in the healthcare sector.
Das has observed that India has been able to pull itself out of all previous pandemics within two years and noted that growth became "excessively dependent on government expenditure in prior pandemics."
The RBI Governor promised to provide ample liquidity in the system.
"The RBI did not compromise on core banking principles, unlike many other central banks. RBI purchases were confined to risk-free sovereign bonds, and we will continue to support recovery by ensuring ample liquidity in the system," he said, acknowledging that recovery in the services and trade sectors is "yet to gain traction."