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All policy planners want low interest rate, says FM Arun Jaitley

RBI is scheduled to come out with its fourth bi-monthly policy review for the fiscal on September 29 and with uncertainty getting over with regard to the US Fed rate, the central bank may yield to the pressure of easing rates.

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Union Finance Minister Arun Jaitley
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Pitching for an interest rate cut to boost growth, Finance Minister Arun Jaitley on Friday said everyone, including policy planners, wants lower rates, but emphasised he would not like to influence RBI's decision on the issue.

Asked if the status quo by US Federal Reserve could prompt RBI to cut interest rate, Jaitley said "RBI is managed very professionally, they look at all the figures and developments, both internal and external environment, and take their own decision".

RBI is scheduled to come out with its fourth bi-monthly policy review for the fiscal on September 29 and with uncertainty getting over with regard to the US Fed rate, the central bank may yield to the pressure of easing rates.

"Any policy planner would like a cheaper cost of capital, but that's not a decision which I would like even to influence at this stage because it's a decision which RBI has to take," Jaitley told TV channels.

RBI Governor Raghuram Rajan had earlier said the central bank will be closely watching the decision of the US Federal Reserve.

Earlier in the day, Minister of State for Finance Jayant Sinha said in New Delhi that there is a "favourable" environment for monetary policy action by RBI.

"We are in a favourable environment now. Obviously, all of these have to be balanced and RBI has to take its decisions," Sinha said.

He added that central banks globally tend to take a data-driven approach towards their monetary policies.

In what could be termed as the most-awaited Fed meeting since the 2008 global credit crisis, the world's most powerful central bank on Thursday postponed its intended decision to increase interest rates from zero till the end of the year, giving a big relief to India and other developing countries.

RBI has cut interest rate by 0.75% this year in three tranches. It refrained from reducing the rate further in the last bi-monthly monetary policy in August. Since then, consumer as well as wholesale price inflation has dived to record lows in August on falling global commodity prices.

Replying questions on Goods and Services Tax (GST), Jaitley said he is certainly confident of rolling it out.

"Depending on when GST gets cleared by Parliament, we have to decide a date. And we must always bear in mind that GST is not a tax which has to be introduced only on April 1 or not at all. It is a tax which can be introduced on any day," he said.

The Constitution Amendment Bill for rollout of GST has been passed in the Lok Sabha, but is yet to be approved by the Rajya Sabha where the ruling BJP does not enjoy majority of its own.

Indirect tax reform GST will subsume excise, service tax and other local levies.

The government had fixed the GST rollout date as April 1, 2016.

On whether the government will be able to meet the disinvestment target of the current fiscal, Jaitley said the department has lined up a host of PSU stocks and it is still the first half of the financial year.

"Market conditions are certainly very difficult and therefore, in the midst of these difficult circumstances to manage that target is our eventual goal. Now, we have a number of PSU stocks, we are still in the first half of the year and therefore, let's try and see... as much as we can do," he said.

The government has set a total disinvestment target of Rs 69,500 crore, of which Rs 41,000 crore is to come from PSU stake sale and Rs 28,500 crore from strategic stake sale.

So far this fiscal, the disinvestment department has managed to raise Rs 12,600 crore through stake sale in four PSUs.

As for clarity over FDI in the insurance sector, Jaitley said the insurance industry is in dialogue with the department of economic affairs and revenue. 

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