The Reserve Bank of India (RBI) governor Bimal Jalan said today the central bank would continue with its soft interest rate policy. Jalan, who was here to attend the high-level capital market committee meeting, came to meet finance minister Yashwant Sinha today.
Replying to reporters query if RBI would stick with its soft interest rate policy, Jalan said, "Yes. That is what we have exactly said in the credit policy."
During its mid-year review of monetary and credit policy last month, the RBI cut its key interest rate by half a point to 6.5 percent, its lowest level in three decades. The move was aimed at helping India's slowing economy grapple with the global slowdown which was only accentuated after September 11 attack on the US.
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Jalan further said the government borrowings were on track. The Centre's gross borrowing stood at Rs 97,000 crore till November, which is 81.61 per cent of the budgeted Rs 1,18,852 crore.
Meanwhile, PNB Gilts said the government seemed to be in a "comfortable" position after it raised Rs 97,000 crore till November two, even as fiscal deficit slipped to Rs 57,262 crore in the first half of 2001-02. It was however, lower at Rs 81,183 crore during the same period last fiscal.
Net borrowings amounted to Rs 66,896 crore till November 2 as against Rs 50,026 crore during same period last fiscal. Higher borrowing was mainly on account of a mounting fiscal deficit.
"Fiscal deficit for April-September 2001 stood at Rs 57,262 crore amounting to 49.2 per cent of budgeted estimates as against 38.3 per cent in the corresponding period last year," PNB Gilts said.
The bank rate and CRR cuts improved sentiments in the government securities market. "With Rs 6,000 crore inflow into the system on November three (on account of CRR cut), the short term outlook for gilts in the next fortnight appears to be positive," it said. "Continuing low inflation is unlikely to exert any upward pressure on interest rates," it added.