ADB pitches for more monetary steps by RBI to boost economy

The Asian Development Bank (ADB) today pitched for more monetary steps to boost the Indian economy saying it would not be prudent for the government to provide further stimulus in view of the rising public debt.

"With little room for further fiscal maneuver and inflation largely in abeyance, it is monetary policy that will have to revive growth in the short run," said the ADB Outlook for 2009 today.

The Reserve Bank of India (RBI) is scheduled to come out with its annual monetary policy on April 21, in which it could announce steps to boost economy.

"There is limited fiscal space so that leaves the remaining option at monetary easing if Reserve Bank feels that there is some degree of further stimulus of easing the policy rates without undermining inflation, strong reserves... RBI may wish to consider further policy rate cuts," said ADB South Asia Department Director Bruno Carrasco while releasing the report.

The RBI since October last year has cut repo rate by 400 basis points to 5 per cent while the reverse repo rate has been cut by 250 basis points to 3.5 per cent.

International Monetary Fund also recently advised India on to initiate more monetary steps to battle the country's slowing economic growth.