Minister of State for Finance Jayant Sinha on Wednesday said that the off-cycle repo rate cut by the Reserve Bank of India was a welcome move for the citizens, adding that it provides a near-term boost to the economy.
"We had said all along when we discussed the budget that we are pursuing a very prudent fiscal consolidation road map. We had to strike a balance between getting the fiscal deficit down to 3.6 percent and investing in infrastructure and other very necessary sectors. And, it's that balance that the RBI has appreciated is that the fiscal consolidation road map remains in place but at the same time, the quality of government expenditure is good and that the fact, that we have got an off-cycle rate cut from the RBI is very welcome for all the citizens because everybody is looking for a near-term boost to the economy and with the rate cut coming as it does right now does provide that near-term boost to the economy as well," he told media here.
"In the last year, Nifty has gone up 50 percent and with the Nifty moving that much to sustain that move and to create this trajectory where post the budget, the market has moved upwards despite that it already having move up 50 percent gives you a sense of what the level of conviction is both form foreign investors as well as domestic investors about the soundness of our policies and the strength of the economy and where the economy is likely to be over the next five or ten years," he added.
Sinha further said the goal of the budget and economic policies was to get the Indian economy to a sustainable, non-inflationary growth part of 7 to 8 percent in the long run for the next decade.
The Reserve Bank of India (RBI) has cut the Repo Rate by 25 basis points to 7.5 percent, signaling that it was convinced by the fiscal consolidation measures announced in the budget proposals for 2015-16.
The RBI has kept the cash reserve ratio (CRR) unchanged at four percent.
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This is the second out of turn 25 basis point-cut after the one in January.
The RBI move to cut the Repo Rate by 25 BPS had its immediate impact with the Bombay Stock Exchange's Sensex opening on a record high 30000 points and the National Index or Nifty opening at 9100 points in early morning trade.
The Sensex is up 407.43 points or 1.4 percent at 30001.16, and the Nifty is up 112.90 points or 1 percent at 9109.15.