A day ahead of the RBI's monetary policy announcement, Finance Secretary Arvind Mayaram today suggested that the economic conditions were becoming favourable for cut in interest rates.
"Conditions are becoming favourable for a more benign monetary policy going forward in this year," he said at a function of the Madras Chamber of Commerce & Industry here.
Mayaram argued that the wholesale price (WPI) inflation is at the lowest level since October, 2009 and retail inflation (CPI) is less than 8 per cent which is the target for this year according to a RBI panel report.
He further said that Current Account Deficit(CAD) has been brought down substantially and this has also been acknowledged as of the key credit strength by S&P in its recent report.
The Reserve Bank, which has kept key interest (repo rate) high at 8 per cent for quite sometime now, is scheduled to come out with its fourth bi-monthly credit policy tomorrow.
The Finance Secretary also exuded confidence that Indian economy will clock a growth rate in the range of 5.7 to 5.9 per cent during the current fiscal year 2014-15. The GDP had slumped to sub-fiv per cent growth in the previous two financial years.
"An upgrade by S&P in the overall outlook from negative to stable reaffirms the fact that the health of the economy is in a much better condition than it was a year ago," he said.
Noting that in the past, large projects had come to standstill and many others were stressed on "slow decision making and paralysis", Mayaram said infrastructure development is one of the foundations on which the present Government wants to accelerate growth and create job opportunities.
"Signs of recovery are visible in the sector, albeit slowly," he said.
