Hopeful that RBI will cut rates on June 2: MoS FM Jayant Sinha

Asserting that the radical steps taken by Modi government has provided macroeconomic stability in the past one year, Union Minister of state for Finance Jayant Sinha today expressed hope that RBI will cut interest rates in its upcoming monetary policy review.

"We have achieved macroeconomic stability, inflation has come down. This now creates room for the Reserve Bank of India to cut rates. I am hopeful that on June 2, Dr (Raghuram) Rajan will cut rates," Sinha said here while addressing industry representatives at CII.

However, he acknowledged that investment flow in the country has gone down, citing high fiscal deficit and high inflation.

"Investment has gone down because last year we had to achieve macroeconomic stabilisation. Therefore monetary policy had to be kept prudent, while fiscal consolidation was also necessary. What we inherited (from previous government) was high inflation and then fiscal deficit had to be controlled.

We had to keep (things) tight therefore investment came down," he asserted.

"But now macroeconomic parameters like inflation, fiscal deficit, CAD, GDP growth have improved," he said while stating that what the Centre had done in the last one year in terms of reforms was as "radical" as was in 1991 (economic reforms).

The minister expressed hope that the country would achieve 7.5% GDP growth in current fiscal.

Detailing the achievements of Modi-led government on economic front, minister said the NDA government's major achievement was winning belief of people who had lost in the government in the last one decade.

"Economic situation was bad, inflation was high, fiscal deficit was high while CAD was in serious position. But we have controlled it," he said.

Describing country's development as "derailed passenger train" during previous UPA-led regime, Sinha said Modi government first put the "derailed passenger train" on track and then turned it into "Rajdhani" train.

"People now ask us why it is not bullet train," he said while talking to media later.

Asked about promise of implementing Swaminathan Commission report, he said he feigned ignorance about it. "I do not know about the detail, but I will study the matter," he said.

On smart city project, he said that about Rs 1 lakh crore has been earmarked for five years.

"Chandigarh will get benefit out of smart city project and it has the potential to become the model smart city in the country," he said.

Earlier, addressing industry representatives at CII, Sinha said that the government was working hard to fulfil its campaign slogan 'Sab ka Saath Sab ka vikas' on the basic principle of 'Antyodaya', which means to serve the last person at the bottom of the pyramid.

"In India, serving the poor and the needy is not a matter of politics but is the moral responsibility of all of us and our government's policies, actions and projects are centred around this theme only," Sinha said.

"Though our government is hugely dedicated to the poor, marginalised and those left behind, but we are also pro-industry, because we know the significance of industry to make the resources and job avenues available to the poor and unemployed youth," the minister added.

Minimum government and Maximum Governance provides a policy based system full of transparency and fiscal federalism with a landmark 10% rise in states' share from devolution of tax revenues from 32% to 42% to make states more responsive," he said.

He added that the government was also planning to invest hugely in infrastructure sector namely the railways, ports, roads and power sector.

"We will invest Rs 1 lakh crore in railways which got zero investment in last 10 years. This will give a five time boost to the economy as a whole. We are planning to have separate rail tracks for freight, passenger, super-fast and very high speed trains. In addition, we will invest 1 lakh crore each in roads and power sector positively", informed Sinha.