Finance Minister, Arun Jaitley, will address the Reserve Bank of India board here on August 9 amid expectations that the central bank will complement government actions by reducing the rates to boost growth.
“The meeting has been scheduled for August 9 where he would be addressing the board members and talk about announcements made in the Budget to perk up growth,” a source said.
Jaitley, who presented his maiden Budget, is likely to inform the RBI board about the steps taken to contain the fiscal deficit and may underline the need to reduce the interest rates to promote growth.
It has been a custom that the Finance Minister addresses RBI board, consisting of RBI Governor and existing three deputy governors, after the Budget.
Food inflation, deficient rains
The meeting comes in the backdrop of persistent high food inflation and deficient rains.
Food inflation is still hovering around 8 per cent. For the month ended June, it stood at 8.14 per cent against 9.5 per cent in the previous month.
“If inflation moderates and RBI agrees, which I am sure will agree, (government would like) to bring down interest rates... We want to go back to a situation of Vajpayee’s time when buying a flat becomes cheaper than taking on rent. So that instalment becomes less than rent,” the Finance Minister had said recently.
In the last policy review in June, RBI chose not to tinker with the policy rate. Thus it was the second consecutive time that RBI Governor, Raghuram Rajan, kept the interest rates unchanged.
Repo rate, CRR
The repo rate, at which the RBI lends to banks, was retained at 8 per cent and the cash reserve ratio (CRR) was kept unchanged at 4 per cent.
The statutory liquidity ratio (SLR), the mandatory amount of bonds lenders must park at the RBI, was cut by 0.5 per cent to 22.5 per cent of their net demand and time liabilities (NDTL) with effect from June 14.
GDP growth
The Reserve Bank of India (RBI) is likely to announce its second bi-monthly policy review on August 5.
As far as economic expansion is concerned, the country has witnessed GDP growth of sub-5 per cent level for past two years.
For 2013-14, the economic growth was restricted to 4.7 per cent. However, the growth is expected to improve to 5.4-5.9 per cent during the current fiscal as per the latest Economic Survey.