Pitching for easy monetary policy in the upcoming review, finance minister P Chidambaram today said that if RBI cuts rates it will help economy to grow at a higher rate of 6.5 per cent in the next fiscal.
“Well I can’t direct Reserve Bank to do this or to do that. All I can say is as statement of fact — if policy rates are reduced it will help us to get 6.5 per cent growth that we have target,” he told PTI in a post Budget interview.
“I am sure that monetary policy advisory committee to the governor will take note of all that we have done, all that we have promised to do and advise him appropriately and I am sure governor will take the decision in his best judgement,” he said.
On fiscal side, government in the last few months have taken several steps including deregulation of fuel price, allowing FDI in multi-brand retail, raising FDI cap in sectors like aviation to boost investors confidence in economy.
Besides, the government also contained fiscal deficit below the targeted level of 5.3 per cent of GDP in the current fiscal. However, growth slipped to a decade low of 4.5 per cent in the third quarter of the current fiscal. As per the CSO estimates, the economy is expected to grow at 5 per cent for the entire fiscal, against 6.2 per cent in 2011-12 and 9.3 per cent a year before that.
The latest Economic Survey released last week said Indian economy is likely grow at a rate of 6.1 to 6.7 per cent in the next fiscal claiming that the downturn is more or less over and economy is looking up. RBI is scheduled to unveil mid-quarter review of monetary policy on March 19.