In an interview to a news agency, Finance Minister P Chidambaram remarked that Reserve Bank of India (RBI) would take a decision on reducing policy rate after taking into consideration the fiscal moves of government.
On March 19, the central bank would release mid-quarter review of monetary policy. Shifting its focus from inflation control to growth push-up, RBI in the last monetary policy review in January reduced the short-term interest rate by 0.25 percent after a gap of nine months.
Chidambaram hopes that the monetary policy advisory committee to the Governor will take note of all that the government did, all that the government promised to do and advise the Governor appropriately. He also expressed confidence that the Governor would take the decision in his best judgement.
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.
It may be noted that economic growth slipped to a decade low of 4.5 percent in the third quarter of the current fiscal.
As per the CSO estimates, the economy is expected to grow at 5 percent for the entire fiscal, against 6.2 percent in 2011-12 and 9.3 percent a year before that.
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