After the president of the European Central Bank (ECB), Mario Draghi, on Thursday called on governments to spend their way out of slowdown, analysts are waiting to see whether his Indian counterpart — RBI governor Shaktikanta Das — will follow suit.

Das’s principal mandate is to check inflation by controlling money supply, but he has maintained that growth has become the highest priority for the bank’s interest rate-setting monetary policy committee (MPC).

He had gone on to say the central bank alone cannot boost the economy and there was a need for more reforms with various stakeholders having a role to play in addressing the slowdown — though he has fallen short of endorsing a fiscal stimulus. “You cannot have a fiscal solution to long-term growth.”

With the latest data showing retail inflation staying within the central bank’s medium-term target of four per cent, experts feel it will give room to Das and others at the MPC to continue with further rate cuts.

According to Sujan Hajra, chief economist and executive director at Anand Rathi Shares & Stock Brokers, a large fiscal stimulus from the government is unlikely given the softness of the economy that has already affected revenue collections.

Limited options

“The Centre does not have much space for stimulus. However, it will continue to take policy measures to facilitate more flows, to make conditions for businesses easier and to reduce the compliance requirements.

“On the other hand, the RBI has the elbow room to continue with rate cuts, injecting liquidity and ensuring that banks transmit the lower interest rate to customers,” he added. The government has had more ammunition to deal with slowdowns while the current situation is complicated by limited capability to do a broad-based fiscal stimulus’’, a note from Kotak Institutional Equities said.