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Fiscal deficit reduction not necessarily contractionary: RBI chief
January 29, 2013 / 10:53 AM / 5 years ago

Fiscal deficit reduction not necessarily contractionary: RBI chief

An employee counts currency notes at a cash counter inside a bank in Kolkata June 18, 2012. REUTERS/Rupak De Chowdhuri/Files

MUMBAI (Reuters) - The RBI does not necessarily see steps taken to reduce the country’s fiscal deficit as contractionary, its Governor Duvvuri Subbarao said on Tuesday.

“I do not see fiscal deficit reduction as necessarily contractionary. Indeed, it might be growth enhancing,” Subbarao said in a post-policy conference with reporters.

Earlier in the day, the Reserve Bank of India cut its key repo rate and banks’ cash reserve ratio by 25 basis points each.

Reporting by Neha Dasgupta; Editing by Prateek Chatterjee

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