New Delhi (IANS) The Finance Ministry on Friday said it has taken into account RBI’s downward revision of GDP growth rate for the fiscal to 6.1 per cent while hailing the 25 bps cuts in repo rates which will complement the recent measures.
“Government has noted the reduction in repo rate from 5.40 per cent to 5.15 percent announced by the Monetary Policy Committee (MPC) and believes that this will complement the recent measures taken by the government to accelerate growth.
Government has also taken note of the revised growth projections of the MPC at 6.1 per cent for 2019-20 along with growth projections made by other bodies including the IMF, ADB etc.
Government has further taken note of higher projection of headline inflation by MPC for 2019-20, which is within the band of 3-4 per cent and well within the “target range”, a finance ministry statement said.
Retail inflation in August accelerated to a 10-month high but remained well below the RBI’s medium-term target of 4 per cent for a 13th straight month. The RBI also cut its GDP growth estimates to 6.1 per cent, from earlier estimate of 6.9 per cent.
The Reserve Bank of India (RBI) on Friday cut interest rates for a fifth straight meeting this year by a further 25 basis points, stepping up its efforts to kickstart an economy growing at its slowest pace in six years. The central bank has lowered GDP growth estimate from 6.9 per cent to 6.1 per cent.
The repo rate or the rate at which RBI lends to banks has been revised to 5.15 per cent from 5.40 per cent. Likewise, the reverse repo rate has been adjusted to 4.90 per cent.
RBI marginally revised up retail inflation forecast to 3.4% for Q2, but retains estimates for H2 at 3.5-3.7%,” Governor Shaktikanta Das said after the Monetary Policy Committee meeting.
In the last two months, the government announced a series of measures including steepest cut in corporate tax, rollback of enhanced surcharge on Foreign Portfolio Investors, among others to jump-start growth, which hit a six-year low of 5 per cent during the first quarter of the current fiscal.
Last month ADB cut down India growth rate for the fiscal to 6.5 per cent from 7.2 per cent earlier. IMF too lowered India growth rate to 7 per cent by 30 bps .