Rajan wants govt to do its bit to ease rates

NEW DELHI: Reserve Bank of India (RBI) governor RaghuramRajan may have indicated the possibility of cutting rates early next year but he has also handed over a "to do list" to the government to create conditions for easing rates. Jackpot Trading Tips

To begin with Rajan lists an increase in investment as critical for a sustained acceleration in overall economic activity. He has clearly identified the policy priority for the government. "...the still slow pace of reviving stalled projects, despite government efforts, warrants policy priority even as ongoing efforts to ease stress in the financial system to unlock resources for financing the envisaged investment push," Rajan said in the monetary policy review. 

While Rajan is confident about the government's resolve to meet the fiscal deficit target, he does express some concerns over weak revenues and the pace of disinvestment or stake sales in state-run companies. Nifty Trading tips

"The fiscal outlook should brighten because of the fall in crude prices, but the weak tax revenue growth and the slow pace of disinvestment suggest some uncertainty about the likely achievement of fiscal targets, and the quality of fiscal adjustment," Rajan said. 

He said a durable revival of investment demand continued to be held by infrastructural bottlenecks and lack of assured supply of key inputs such as coal, power, land and minerals. "The success of ongoing government actions in these areas will be key to reviving growth and offsetting downside risks emanting from agriculture.Intraday Trading Tips 

The Finance Ministry said it was encouraging that the RBI had taken note of the structural change in the outlook for inflation and promised to work for a new monetary policy framework. 

"The ministry states that the government looks forward to the RBI supporting the revival of growth and employment. In the weeks ahead, the government and RBI will work towards a monetary policy framework that will help institutionalize the gains achieved on the inflation front, so as to reduce inflationary expectations and further support the revival of investment and growth," the ministry said in a statement . Financial Astrology Trading Tips
The government has taken on the daunting challenge of keeping the fiscal deficit within the 4.1% of gross domestic product against the backdrop of sluggish revenues and slow disinvestment programme. While the stake sale drive is expected to gather momentum in the weeks ahead, economists doubt whether the government would be able to raise the targeted Rs 63,000 crore. 

On Inflation too, Rajan seems to be adopting a cautious approach and expects inflation for December to rise well above current levels as the impact of the favourable base effect wears off.Free Stock Share Tips