Planning Commission Deputy Chairman Montek Singh Ahluwalia has appreciated the RBI's move to cut key interest rate by 0.25 percent and said that it could have given a more robust signal to the industry. While addressing an Assocham conference, he said that the rate cut was a signal in the right direction and he was glad that RBI had signaled continuing reduction of the rate, however he also added that a rate cut of 75 basis points would have indicated a stronger signal to push economic growth.
For the second time in 2013, Reserve Bank of India (RBI), in an effort to revive the faltering economy, went ahead and slashed repo rate by 25 basis points at 7.50% against 7.75% earlier in its ‘Mid-Quarter Monetary Policy Review: March 2013, but left its Cash Reserve Ratio (CRR) unchanged at 4%.
As per the Ahluwalia, if everything goes well on the economic growth front for the next three months, then the economy will be back on higher growth trajectory in the long run.
Commenting on the infrastructure sector, he said that for the 12th Five Year Plan (2012-17), the $1-trillion investment target in the infrastructure sector with half of it coming from private sector, was an optimistic number. Further, he said that the planned $1-trillion investment target in infrastructure for 12th five year plan would mean a debt component of $700 billion and the financial institutions would have the burden of financing that.
