Pro-Growth Manifesto, Says Sinha

The rate cuts are bold decisions.and the growth rate can be as per projections, feels the FM

Finance Minister Yashwant Sinha today said the overall stance of the busy season credit policy announced by Reserve Bank of India (RBI) governor Bimal Jalan was "pro-growth". He, however, said it was now for the trade and industry to take advantage of the measures.

The finance minister said the policy was "forward looking" and addressed the needs for the second half of the current fiscal. "The reduction in interest rate is a bold decision. In my view the 50 basis point reduction is a very good decision," Sinha said.

Terming the cut in cash reserve ratio (CRR) by 200 basis points as a "very deep cut", Sinha said it would help pour money into the market and enable banks to lend more. It is for the first time that CRR has been brought below 6 per cent, he said, adding it would further improve liquidity in the market.

"If we work in tandem for the next few months, I am quite sure that the growth rate will be what RBI projected," Sinha said.

Commenting on the scaling down of the GDP growth estimate for the current fiscal by the apex bank from 6-6.5 per cent earlier to 5-6 per cent now, Sinha said, "I would like to hope that it would be on the higher side of the band which RBI has given rather than on the lower side." He, however, added, much would depend on the trade and industry also.

To a question if he expected the banks to cut interest rates, Sinha said it was up to the banks now. "I am given to understand that the largest bank State Bank of India (SBI) is looking at deposit and lending rate cut."

"I would, however, continue to insist on banks reducing transaction cost," he said, adding encouraging reduction in non-performing assets has taken place while the voluntary retirement schemes in banks have been a success.