FM Arun Jaitley nudges RBI to cut rate to boost growth

Written by PTI | New Delhi | Updated: Aug 11 2014, 02:16am hrs
Arun JaitleyFinance Minister Arun Jaitley and RBI Governor Raghuram Rajan at a press conference after the RBI Central Board Meeting in New Delhi (Photo: Ravi Kanojia)
Nudging the RBI to cut interest rates in the backdrop of softening inflation, Finance Minister Arun Jaitley today said he had already made his mind clear and hoped the central bank will take a call on the issue after considering various factors.

Jatiley said following credit policy announcements by the RBI in June and August he had issued statements clarifying the Finance Ministry's position on growth, inflation and interest rates.

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

The RBI had maintained status-quo on interest rate in its two credit policies announced after the formation of the new government in May, notwithstanding the industry demand for cutting rates for boosting growth .

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

Earlier in June also, he had said the government was "concerned with restarting" the investment cycle and moving towards higher growth and job creation.

In June, while retail inflation slipped to 30-month low of 7.31 per cent, the wholesale price index dropped to four-month low of 5.43 per cent.

On disinvestment programme, Jaitley said the government has already provided the target for the current fiscal and it is progressing as per schedule.

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 per cent 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-five per cent 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.