More steps in offing to boost growth, says Chidambaram

The government will take more policy steps in the next one-and-half months to revive growth, Finance Minister P Chidambaram said while appreciating the RBI's initiative to unlock Rs17,000 crore of banking funds through reduction in CRR by 0.25%.

"I am very confident that between now and October 30 the government is expected to take a number of additional policy measures and also lay out a plan of fiscal consolidation. The response of RBI on October 30 will be far more supportive of growth," Chidambaram told reporters here.

The Reserve Bank is scheduled to come out with second quarter monetary policy review on October 30.

In its mid-quarterly monetary policy review announced earlier in the day, the RBI lowered cash reserve ratio (CRR), the portion of deposits banks park with RBI, by 0.25% to 4.5%. CRR reduction would infuse Rs17,000 crore into the financial system.

The RBI, however, kept short-term lending and borrowing rates unchanged, disappointing India Inc.

Chidambaram, said: "It (CRR cut) is a small step, but a welcome step. I am not disappointed with the RBI policy. Mid quarter review by RBI is encouraging and supportive. RBI is slated to take more decisions".

After assuming charge of the Finance Ministry last month, the finance minister had said he would take steps to boost economy and revive investor confidence.

Economic growth had slowed to a nine-year low of 6.5% in 2011-12. The GDP growth in the April-June quarter was 5.5%, lower than 8% recorded in same period of last fiscal.

The government has already taken a slew of reform measures including allowing FDI in multi-brand retail and allowing foreign carriers pick up stake up to 49% in Indian aviation companies. Besides, the government also hiked diesel prices by Rs5 a litre and capped the number of subsidised LPG per family to six a year.