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Appreciating the RBI’s decision to cut key interest rate by 0.25 per cent, Planning Commission Deputy Chairman Montek Singh Ahluwalia today said that it could have given a more robust signal to the industry.
“This (rate cut) is a signal and I have to say that it is in the right direction”, he said here while addressing an Assocham conference.
Repo rate cut
“We are looking at it with unhappiness. We feel, the signal should have been stronger...Many people would say that the signal should have been more robust than 25 basis points,” Ahluwalia said while commenting on RBI’s decision to cut short-term (repo) rate by 0.25 per cent to 7.5 per cent to boost growth.
“I am glad that RBI has signalled continuing reduction of the rate,” he said, adding that the macro-economic situation has started turning around for the better.
Economic growth
According to Ahluwalia, if everything goes well on the economic growth front for the next three months, then one can say that the economy will be back on higher growth trajectory in the long run.
He opined that the $1-trillion investment target in the infrastructure sector with half of it coming from private sector, for the 12th Five Year Plan (2012-17), is an ambitious number.
Infrastructure investments
As per his assessment, the investment in infrastructure in 12th Plan could be $900 billion with half of it coming from the private sector.
He said that the targeted $1-trillion investment in infrastructure for the current Plan period would mean a debt component of $700 billion and the financial institutions would have to think on financing it.
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