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The Finance Ministry today hailed the Reserve Bank of India's move to cut cash reserve ratio (CRR) by 50 basis points, stating that it would to a great extent reduce the cost of funds for the banks.
Describing this move as a good way for enhancing economic growth, the Economic Affairs Secretary, Mr R. Gopalan, said it is time for the country to once again focus on growth as the interest rates have peaked.
He expects inflation to be about 7 per cent or less by March. On rupee, Mr Gopalan said that the uncertainty surrounding the local currency was over now and the movement will be based on daily demand and requirements. The Indian rupee today hit a 10-week high of Rs 49.95 against the US dollar on strong foreign currency inflows.
The CRR cut, which has been done to ease the tight liquidity situation, would ensure that the amount would be available in the system continuously, he pointed out. The RBI move on the CRR front is expected to release Rs 32,000 crore into the system. The CRR has now been brought down to 5.5 per cent.
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