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Finance Minister Arun Jaitley nudges RBI to cut rate to boost growth

Sunday, 10 August 2014 - 5:37pm IST | Place: New Delhi | Agency: PTI

Nudging the RBI to cut interest rates to boost growth, Finance Minister Arun Jaitley on Sunday said he had already made his mind clear and hoped the central bank will take decision after taking into account various factors.

The Reserve Bank of India (RBI) had maintained status-quo on interest rate in its two credit policies announced after the formation of the new government in May.

"I, on the same evening (June 3 and August 5) already issued a clear statement and I think that's very clear. This an issue that the RBI decides and I am sure they factor in various circumstances," Jaitley told reporters after addressing the Central Board of the Reserve Bank in New Delhi.

After the August 5 RBI's monetary policy, Jaitley had said inflation was moderating and going forward "the RBI should examine the liquidity situation, inflation and growth in setting policy rates".

On June credit policy, he had said the government was "concerned with restarting" the investment cycle and moving towards higher growth and job creation.

RBI Governor Raghuram Rajan, who was present at the press meet, said "as of now, we think the policy (to contain retail inflation) is on target. We (RBI's policy measures) are contingent on the data coming in".

The policy regime, Jaitley said in his address to RBI board, was being geared to attain higher growth, lower inflation and sustainable external balance in the backdrop of sub-five per cent growth in last two ficals.

The RBI Board a statement said reviewed the current economic situation, global and domestic challenges and policy responses. Meanwhile, replying to a question on retail inflation targets for January 2015 and 2016, RBI Governor Raghuram Rajan, who was present at the press meet, said "as of now, we think the policy is on target. We (RBI's policy measures) are contingent on the data coming in".

RBI is targeting a retail inflation (CPI) of 8% in January 2015 and 6 per cent in the following January. Later, RBI in a statement said that while addressing the board, the Finance Minister stressed that the policy regime was being geared to attain higher growth, lower inflation and sustainable external balance in the backdrop of sub-5% growth in last two fiscals.

The RBI Board reviewed the current economic situation, global and domestic challenges and policy responses. Jaitley also told the board that tax incentives have been enhanced to promote household savings and measures are being taken accelerate credit flows to infrastructure and promote agriculture growth.

The Board was also told that steps are being taken to encourage investment in the country. The Finance Minister also discussed financial inclusion programme of the government, which is expected to be unveiled by Prime Minister Narendra Modi in his Independence Day speech.




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