Chidambaram would like to see lower interest ratesMarch 4th, 2008 - 10:01 pm ICT by admin
New Delhi, March 4 (IANS) While maintaining that interest rates were the domain of the central bank, Finance Minister P. Chidambaram Tuesday said he would like to see the cost of credit becoming cheaper for consumers and industry to boost growth. “Interest rate is an important instrument to contain inflation,” the finance minister told an interactive, post-budget session with the members of the Confederation of Indian Industry (CII) here.
“I think there is scope for deficit rates to drop and interest rates to drop,” he said, adding: “I am sure this will be reported, TV channels will air this. I am sure the Reserve Bank of India governor (Y.V. Reddy) will see the reports and take appropriate action.”
He said both the central bank’s policy and the government’s commitment, as repeatedly stated by Prime Minister Manmohan Singh, was to see lower inflation with higher growth. “But there is no real quick solution to this,” he added.
“The Reserve Bank has to maintain price stability. The mandate is for growth with reasonable price stability,” he said.
If the finance ministry assumes a nominal growth of 13 percent in the gross domestic product (GDP) and a real growth of 9 percent, then inflation would have to be close to 4 percent, the finance minister said.
“I can say that China’s inflation is a good 1.5 percentage points more than India’s,” the finance minister said, adding that the country also had a growth that was higher by a similar level, compensating one for the other.
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