If India remains on the path of fiscal consolidation, it creates a better outlook for inflation, subsequently creating space for the Reserve Bank of India to ease monetary condition over a period of time, Navneet Munot, chairperson of the Association of Mutual Funds in India said on Thursday.
"It's a critical input for both the RBI as what the government is doing on fiscal side, and as well as supply-side," Munot told NDTV Profit.
Fiscal consolidation gives more independence to the central bank on the monetary policy side, he said.
The Union government has set a fiscal deficit target of 5.1% for the next financial year, with gross borrowing pegged at Rs 14.13 lakh crore, Finance Minister Nirmala Sitharaman said, while presenting the interim budget 2024 in Parliament.
Munot cautioned about the global developments for inflation trajectory and monetary policy outlook.
He sees better prospects in the long-term rather than short-term as many other factors apart from outcome of the budget could affect the capital inflows to Indian equities.
Munot highlighted that the budget tried to strike a balance between the objectives of growth momentum and near-term consolidation.
"We need to balance both—growth impetus over the period of time. Growth will help us bring down the public debt to GDP. At the same time, the near-term consolidation," he said.
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