'Rise in inflation not to put pressure on interest rates'

The government has said the tax proposals introduced by Finance Minister Pranab Mukherjee in his Budget for 2010-11 will marginally fuel inflation but would not put any pressure on interest rates.

"We don't see pressure on interest rates from fuel price hike," Finance Secretary Ashok Chawla said, when asked if the increase in inflation would put pressure on interest rates.

Finance Minister Pranab Mukherjee had said that hike in the petroleum prices from February 27 would lead to 0.41 per cent hike in inflation.

While addressing the captains on India Inc yesterday, the Finance Minister had said the RBI is fully aware of the requirement of the industry and the crucial interest rates have been allowed to remained unaffected for quite some time.

Taking into the view the surplus liquidity, RBI raised cash reserve ratio, the amount of deposits banks are required to keep with the apex bank, by 75 basis points mobilising Rs 36,000 crore from the market as an indicator to tight money policy.

"That was needed. Certain amount of contraction was called for but crucial interest rates have remained unaffected," he said.