Fiscal deficit reduction not necessarily contractionary: RBI chief

Last Updated: Tue, Jan 29, 2013 11:40 hrs
An employee counts Indian currency notes at a cash counter inside a bank in Kolkata

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.

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