Need judicious mix of policies to deal with Brexit: FM

The Dollar Business Bureau

In order to deal with the uncertainty due to Brexit, India has emphasised on the need for a careful mix of monetary, fiscal and structural policies by key economies.

"Governments, Central Banks and regulators have to mitigate the pressure of such vulnerabilities through judicious mix of fiscal, monetary and structural policies," Arun Jaitley, Minister of Finance said in his address at the meeting of the Board of Governors of the New Development Bank (NDB).

In his address, which is read out by Raj Kumar, Joint Secretary, Ministry of Finance, Jaitley stated that the UK’s decision to leave the EU, commonly known as the Brexit, has further augmented uncertainty, volatility in the market and disinclined behaviour towards taking risks.

The Joint Secretary was representing India at NDB’s first annual general body (AGM) and board of governors meetings that were held on Wednesday in Shanghai, as the Finance Minister was not able to attend due to the current monsoon session in the Parliament.

He said that the present global economic scenario is far-off from being stable and is evident by a moderate improvement in few advanced economies from their low growth levels.

He further said that fall in growth in developing markets and economies, increased volatility in the financial sector, and negative projections of global growth by IMF (International Monetary Fund), also pose risks and challenges.

Earlier in the week, IMF declined global growth predictions for the next year by 0.1 percentage point to 3.4 percent, quoting the considerable increase in political, economic, and institutional uncertainty in the wake of Brexit.

Jaitley said that the fundamental problems of emerging and developing economies will remain to impact their growth.

“The slower world trade and low prices of commodities have also put an adverse impact on the commodity-exporting emerging and developing economies, by augmenting their business and other economic vulnerabilities,” Jaitley said.

Jaitley emphasised that India is following the methodology of ‘reform to transform’ with the help of its extensive structural reforms.

“The government has taken various initiatives to strengthen investment climate in the country and to improve ease of doing business,” he added.