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RBI Monetary Policy Committee (MPC) Member Ashima Goyal said the government should not go in for an 'aggressive fiscal consolidation' in the upcoming budget as global risks have not abated. She further said subsidies are expected to come down as food and energy inflation moderates. WPI inflation in food articles in November was 1.07 per cent against 8.33 per cent in the previous month. In the 'fuel and power' basket, inflation was 17.35 per cent last month.

She said ‘Given fears of a global slowdown, this is not the time for aggressive consolidation. Sticking to small pre-announced steps on the path will minimise growth sacrifice, while moderating demand and the current account deficit, thus lowering the risk premium that keeps spreads high and raises the cost of government and private borrowing’.

According to Goyal, the strategy includes prioritising investment while giving essential support for the vulnerable. She said ‘Better composition of government expenditure and other supply-side action has enabled excellent monetary-fiscal coordination that has strengthened Indian macros’. While noting that debt ratios came down sharply last year under higher growth, she said institutions and incentives have to be strengthened to help sustainably implement the strategy including in states. According to Goyal, supply-side action also contributed and inflation is already within the tolerance band, without hurting the nascent growth recovery. She asserted ‘India has handled the shocks better than most major economies’.