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Ahead of the annual credit policy review, the RBI Governor, Dr D. Subbarao, today met the Prime Minister, Dr Manmohan Singh, and the Finance Minister, Mr Pranab Mukherjee, and is believed to have discussed the macro-economic situation and steps to arrest the decline in growth.
The RBI is scheduled to announce the annual review of its monetary policy on April 17. It is a standard practice for the RBI Governor to discuss the state of economy with the Finance Minister before the review of the monetary policy.
India Inc wants RBI to cut the interest rates to help push economic activity which has slowed down, more so as inflation has started moderating. Inflation, which remained high during 2010 and most of 2011, slowed to 6.95 per cent in February.
The central bank has adopted the tight money policy since March 2010 to tame high inflation by hiking the interest rate 13 times. However, it has not hiked the key rate (repo) in its past three policy reviews and has even hinted at reversal of the policy rate cycle.
India’s economic growth in 2011-12 has been estimated at 6.9 per cent against 8.4 per cent in the previous year. However, the Government expects the economy to clock 7.6 per cent GDP growth in the current fiscal.
During April-February 2011-12, the Index of Industrial Production (IIP) growth has slowed to 3.5 per cent against 8.1 per cent year-on-year.
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