Pitching for a rate cut, Finance Minister Arun Jaitley, at an investor summit underscored that lower cost of capital would provide a good fillip to the economy. He nudged Reserve Bank of India to cut interest rates to boost growth at a time when inflation, especially food inflation had come down substantially over the past few months and global fuel prices ebbed to four-year low.
Cajoling India’s apex bank, he averred that RBI, which is a highly professional organization, if in its wisdom decides to cut down interest rates then this will give a good impetus to the Indian economy. However, in order to cut down on growing clamor of rate cut, RBI Deputy Governor S S Mundra, who was present at the same summit, emphasized the central bank revises rate, but not on 'popular demand' and further stated that it only does when there is a clear conviction in doing so.
Earlier, too, pouring cold water on hopes of rate cut by RBI in its upcoming monetary policy, it’s another deputy governor, HR Khan highlighted that recent decline in inflation did not mean the decline was permanent. He also emphasized that though decline in crude oil prices and other commodities were beneficial to Indian economy, policy makers just could not jump their guns until they were convinced the trend was firmly established.
The clamor for rate cuts have been growing louder after inflation measured by the wholesale price index has fallen to a five-year low of 1.77% in October, while consumer price index, which tracks prices consumers actually pay at shop counters, too, fell to a three-year low of 5.52% in October.
Separately, Finance Minister Arun Jaitley also assured investors of more reforms in the near future and large investments from domestic and foreign investors by NDA government, which has already taken several measures to boost growth in the infrastructure sector.
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