Inaugurating India Corporate & Investors Meet, jointly organised by the ministry of corporate affairs and Ficci, he said a fiscal expansion has occurred out of the stimuli and there is a need of shrinking this fiscal expansion. “This fiscal expansion has put inflationary pressures on the economy. Though inflation and growth are not contradictory to each other, inflation (influences policy rates) has some effect on growth,” Mukherjee said.

He said RBI has been adjusting policy rates to tune the economy in an inflationary scenario but “industry has been complaining about policy rates since it was feeling the pinch”.

“I shall not make any projection about the next quarter policy rates but the fiscal expansion that has taken place has to be shrunk,” Mukherjee stressed. He said headline inflation has come down to 7.47 per cent in December and “this I believe will continue till March.”