Two policymakers see case for RBI rate cut - report

MUMBAI (Reuters) - Two key officials in the Finance Ministry said the case for easing of interest rates by the Reserve Bank of India (RBI) had strengthened with inflation slowing and the focus staying on fiscal consolidation, the Economic Times reported on Monday.

Junior Finance Minister Jayant Sinha and chief economic adviser at the Finance Ministry, Arvind Subramanian, both see the situation as being ripe for an interest rate cut by the RBI, the newspaper reported.

"RBI is a very professional, data-driven organisation and the data right now is very compelling in terms of interest rates being reduced further," the business daily quoted Sinha as saying.

The comments came after the budget presented by Finance Minister Arun Jaitley on Saturday loosened the reins on public spending to drive growth, but promised lower-than-expected borrowing despite raising the fiscal deficit target.

The RBI had left interest rates on hold at its policy review on Feb. 3, after unexpectedly cutting the repo rate by 25 basis points to 7.75 percent in mid-January.

India's consumer prices inflation accelerated to 5.11 percent in January, after shifting to a new base year for calculating prices, but stayed well below the central bank's target, bolstering prospects for further interest rate cuts.

Subramanian also agreed with Sinha that there was a case for easing, the Economic Times said.

"I think the budget and the fact that inflation continues to come down should reinforce that to some extent and therefore it does open the space for easing of monetary conditions," Subramanian told the newspaper.

(Reporting by Sumeet Chatterjee; Editing by Anupama Dwivedi)