There will be enough room for rate cut: Mayaram

Says there is a continuous push towards creating the right environment for monetary policy to become more liberal

Contrary to the Reserve Bank of India’s view that there is limitedspace for further monetary policy easing, the finance ministry today said there was scope for further easing of the monetary policy in the next review as inflation was coming down.

Economic Affairs Secretary Arvind Mayaram said there was a continuous push towards creating the right environment for the monetary policy to become more liberal. He said RBI’s statement on limited scope was probably in response to a 25 basis points cut in today’s policy and did not give give an indication of its action in the next review.

He said RBI’s concerns on high food prices would be addressed by a significant food production this year, including a bumper Rabi crop by the end of this month.

“We do not have any doubt (that) when the next monetary policy is considered by the RBI they would certainly see that there are adequate reasons for reconsidering the interest rates which are prevailing now and push for more growth. We in the government have been taking steps to revive investment,” Mayaram told reporters on the sidelines of ADB conference.

The Cabinet Committee on Investments has approved total projects worth Rs 93,000 crore in last four months. The government is also considering measures to attract more foreign investment.

“Let me assure you the growth rate will not be below 6. Growth rate will surprise everyone. Investments are picking up, there are green shoots, the sentiment is improving, FDI is increasing. I have absolutely no doubt that you would certainly see positive movement in this,” Mayaram said.

Asked about the current account deficit, he said it would not be less than 5% this year as exports were picking up and there was no reason to believe that capital flows would be less.