Planning Commission Deputy Chairman Montek Singh Ahluwalia disagreed with the general notion that short-term rates should have been lowered for a boost.
Industry expected lower bank rates, but that would also go along with lower deposit rates, Mr. Ahluwalia said on the sidelines of the ongoing partnership summit here.
He said RBI Governor Raghuram Rajan’s move was a matter of judgment. However, “I don’t think there was much of a case for lowering the interest rate.’’ In his view, the RBI was rightly signalling that the country was doing whatever was necessary, namely, bring inflation under control and to the extent to which the international capital mobility leads to volatility.
On the Governor’s expectations that economic growth would be below 5 per cent in the current financial year, Ahluwalia said, “it is premature in my view to come to any conclusion that GDP growth rate for 2013-14 will be below 5 per cent, at the moment it is below 5 per cent...it will be around 5 per cent may be a little below...” .
This article has been corrected for a typographical error.
Keywords: bank rates, Montek Singh Ahluwalia, RBI policy review, RBI monetary policy, anti-inflation measures, growth momentum, Indian economy, GDP growth, Raghuram Rajan, consumer price index, CPI, wholesale price index, WPI