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Reduction in taxes on fuel to ease inflationary pressure: RBI governor



“The persistence of high core inflation since June 2020 is an area of policy concern in view of input cost pressures that could rapidly be transmitted to retail inflation as demand strengthens.””In this context, the reduction of excise duty and VAT on petrol and diesel will bring about a durable reduction in inflation by way of direct effects as well as indirect effects operating through fuel and transportation costs.”Furthermore, he said price pressures may persist in the immediate term.”Vegetable prices are expected to see a seasonal correction with winter arrivals in view of bright prospects for the rabi crop.””Supply side interventions by the Government have limited the fallout of continuing high international edible oil prices on domestic prices. Though crude oil prices have seen some correction in the recent period, a durable containment of price pressures would hinge on strong global supply responses to match the pick-up in demand as pandemic restrictions ease.”



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