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Sitharaman on RBI Rate Cut: Fiscal-Monetary Coordination

10 February 20251 min read
ECONOMYSitharaman on RBIRate Cut:Fiscal-MonetaryCoordination10 February 2025safalsetu.com

Why in the news

Soon after RBI cut rates, Finance Minister Nirmala Sitharaman said fiscal and monetary policy must work in step to restore healthy growth.

Key facts

  • The cut came after the Budget’s demand-boosting measures, adding to their growth impact.
  • Government expects private investment to revive; industry reaction after the Budget was upbeat.
  • ₹1 lakh crore in tax breaks is meant to support urban demand.
  • Early signs of rising consumption were noted, with industry reporting good demand.
  • Analogy used: “two wheels of a car”.

Exam angle

  • Fiscal plus monetary policy compared to two wheels of a car.
  • Tax breaks cited: ₹1 lakh crore.

Test yourself

1. How did Nirmala Sitharaman describe the relationship between fiscal and monetary policy after the RBI's rate cut?

She likened the two policies to the two wheels of a car.

2. Sitharaman linked Budget tax breaks of what size to spurring urban demand?

The notes cite ₹1 lakh crore in tax breaks.

3. What did the government expect to see revive after the Budget and RBI rate cut?

The government expects private investment trends to revive.

This topic is part of Daily Current Affairs 9 & 10 February 2025 (11 topics).

All topics of the dayDay quizFebruary 2025

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