In a move to help rein in climbing retail inflation, the Indian government could consider reducing taxes on some items such as maize and fuel, according to Reuters.
Quoting sources, the report further said, a decision would be taken only after the release of February inflation data.
India’s retail inflation rate rose to 6.52% in January from 5.72% in December, which is well above the upper end of RBI's comfort zone of 6%.
“Food inflation is likely to stay high, prices of milk, maize and soy oil are adding to inflation worries in the near term,” a senior source familiar with the central bank’s and government’s thinking on the matter was also quoted by Reuters.
India imports more than two-thirds of its oil requirements. A cut in taxes by the central government could push pump operators to pass on the benefits to retail consumers and help bring down inflation.