Calls for aggressive rate cut grow

The clamour for deep interest rate cut of 50 basis points is growing among policy makers in the capital with some predicting a setback to growth prospects in the short term if the Reserve Bank of India (RBI) prefers to play "safe" when it reviews monetary policy later this month. 

Several top government functionaries are voicing concern over high interest rates, which they say are holding back investments from flowing in. While there are several other problems such as stressed assets holding back investments, the overwhelming view is that the central bank should cut interest rates aggressively Stock Market Trading Tips

"There should be at least a 50 basis points cut in rates immediately. The move to persist with 25 basis points cut is unlikely to pay dividends. In fact, RBI should have been more aggressive in its past policy moves," said a senior official linked to policy-making. 

While the government has maintained that decision on interest rate is in RBI's domain, it should consider the favourable data points and the waning of inflationary pressures. The RBI has said that it is not done with rate cuts but will keep a vigil on the trajectory of inflation against the backdrop of deficient monsoon rains Himanshu Tiwari Astrologer Blog

Officials in the capital say the RBI has been adopting a "cautious" approach to interest rates, which is hampering growth. Some say the RBI is waiting to see what rate action the US Federal Reserve unveils before deciding on domestic rates. "The approach is very cautious. We have all the factors ready for rates to come down," said another key official, who did not wish to be named. 

Officials cited data on the inflation front to drive home their point. Both retail and wholesale price inflation levels remain benign, well under RBI's comfort levels. Industrial output, which has shown some signs of an uptick, still remains sluggish. 

The monsoon rains have been 13% deficient but the patchy rains are unlikely to dent rural demand significantly or push food inflation Indian stock market astrology prediction

Even on the fiscal front, with a fall in international crude prices, the subsidy bill would be considerably reduced, and the government is virtually certain of closing the year with a better than budgeted fiscal deficit of 3.9% of GDP but is unlikely to go below that.