Finance Minister Arun Jaitley today pitched for an interest rate cut, expressing confidence that the Reserve Bank of India will move in the direction of making the cost of capital reasonable to help perk up economy.

“The cost of the capital must be reasonable ... If you are unable to infuse liquidity or unable to provide capital which is cheaper then even if you have opened out (economy) that itself won’t be enough. So it is a chain of events which has to take place,” he told PTI journalists in an interaction at the agency’s headquarters here.

RBI, which has kept policy rates unchanged for almost 10 months citing high inflation despite persistent demand from industry and government for a cut to boost economic activity, is slated to review its monetary policy on December 2.

“...it’s their (RBI) job to balance rates with inflation. I am sure they will do it competently. But fact is this is the direction we have to take...we are slowly but surely moving in that direction,” he said.

“I am sure the RBI is run, headed by eminent and competent people. They also see merit,” he said.

WPI, retail inflation

Inflation based on the Wholesale Price Index cooled to a 5-year low of 1.77 per cent in October driven by softening prices of fuel and food items. At the same time, retail inflation, based on Consumer Price Index, also eased to 5.52 per cent at end of October.

With moderation in inflation, there is a widespread expectation that RBI will cut interest rate in its upcoming bi-monthly monetary policy.

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