Millennium Post

FinMin joins India Inc chorus, asks RBI to cut interest rates

Encouraged by the declining trend in inflation, the Finance Ministry on Tuesday made a case for further rate cut by the Reserve Bank to boost sagging growth.

'I think we need to look at statement made by RBI Governor during the last policy review where he had stated that RBI is closely monitoring inflation figures and if there is dramatic change in inflation figures then RBI will take that in to consideration during its next review,' Department of Economic Affairs secretary Arvind Mayaram said.

'So, we do believe that RBI would look at this figure (inflation coming below 5 per cent in April),' he said.

The Reserve Bank of India is scheduled to announce mid-quarter review of monetary policy for 2013-14 on 17 June.

Inflation fell to 41-month low of 4.89 per cent in April.In order to accelerate economic growth, the Reserve Bank  of India earlier this month cut key interest rates by 0.25 per cent. The central bank lowered the short-term lending (repo) rate to 7.25 per cent from 7.50 per cent, lowest since May 2011 while retaining the Cash Reserve Ratio for banks unchanged at 4 per cent.

RBI Governor Duvvuri Subbarao, while unveiling the annual monetary policy, pegged the growth rate for the current fiscal at a conservative level of 5.7 per cent saying, 'economic activity during the current year is expected to show only a modest improvement over last year, with a pick-up likely only in the second half of the year'.

For 2012-13, the Indian economy is expected to grow at 5 per cent, lowest in the decade.
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