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Jayant Sinha bats for rate cut from RBI

14 Sep 2015 Evaluate

After NITI aayog vice chairman Arvind Panagariya stated that RBI has room to cut rates by 50-100 bps, now Minister of State for Finance Jayant Sinha has batted for a rate cut and said that RBI should take into account various factors, including low inflation, while deciding on monetary policy stance.

Sinha stressed on the need to make the Indian exports more competitive by bringing down the cost of capital as also the cost of manufacturing and pointed that the country's economic “growth is not at its potential”. Referring to declining exports, Sinha said there is a need to make Indian exports more competitive by bringing down the cost of capital and cost of manufacturing. He added that RBI will certainly look into the factors like negative wholesale inflation and low GDP deflator while 'establishing its monetary policy'.

He further said RBI is confronted with some conflicting data as WPI is in negative territory, the GDP deflator is at zero, but CPI (retail inflation) looks to be rising from 3.78 per cent in July and get back to 5-6 per cent. So, how one takes into account all these data to decide what the inflationary expectations are and how to best anchor inflationary expectations, that is the job of RBI,' Sinha told PTI in an interview.

Reserve Bank is scheduled to announce its next bi-monthly monetary policy review for the current fiscal on September 29, amid rate cut calls from the industry to boost growth rate, which fell to 7 per cent in the first quarter of 2015-16.


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