Govt pitches for rating upgrade

Rate cut by the RBI shows that the central bank and the govt have an identical view on the economy, CEA Arvind Subramanian said

Soon after RBI announcing a much- awaited rate cut, Chief Economic Advisor Arvind Subramanian said that global rating agencies should look at upgrading their stance on India's credit outlook. "Now we have a 50 basis points rate cut (in two tranches within two months) and I think that is good for the economy and all rate cuts benefits... If the outlook is looking good, the rating agencies should draw their lessons from that om improving the outlook," he said.

After presentation of Union Budget 2015-16 last week, global and domestic agencies had ruled out any immediate upgrade in India's sovereign ratings and had red-flagged the country's delayed fiscal consolidation roadmap and had also warned against any slippages from the "ambitious" disinvestment plan proposed in Budget.

On monetary policy framework agreement, Subramanian said that both Finance Ministry and RBI have shared concern about inflation. Recently, the Finance Ministry and the Reserve Bank agreed to 'inflation rate targeting' under which the apex bank will aim to lower retail inflation to below 6% by January 2016.

On next fiscal’s GDP growth projection, Subramanian said that, "In the Survey, we have increased the projections by 0.6-1 per cent on growth rate, relative to previous year and those increases were predicated on four factors." Those factors included decline in oil prices, reforms being undertaken, monsoon being better and other conditions.

Subramanian said the Budget can be seen as conducive to non-inflationary growth. "The quality of fiscal adjustment in the Budget is good because it shows the shift in expenditure from revenue and public consumption to capital expenditure," he said.

FINMIN: BOOST GROWTH

Welcoming RBI's decision to cut policy rate, Minister of State for Finance Jayant Sinha said it will bring down EMIs, raise demand and boost economic growth.

He said there is a further room for easing policy rate.

"We are in a situation where we see EMIs (Equated Monthly Installments for loan repayments) coming down. Revenue Secretary Shantikanta Das said it augurs well for business and will prompt people to go in for housing and consumer loans which will boost demand and growth.