The economy is moving towards a regime of lower interest rates and can see a growth rate of over 7 per cent in three years, Finance Secretary Arvind Mayaram said. “We are moving towards a regime where inflation should come down. Going forward, it must come down,” he said speaking at the anniversary programme of Madras Chamber of Commerce and Industry (MCCI) here on Monday.
However, Dr. Mayaram said he was not sure at what point the Reserve Bank of India would be comfortable, but said he was confident that interest rates should come down sooner than later due to the measures such as containing borrowings taken by the government.
The Reserve Bank of India will announce its monetary policy on Tuesday, and is expected to maintain its status quo on interest rates.
Once inflation came down, savings would go up and that would create liquidity for lending mainly to small and medium scale businesses, he added.
Dr. Mayaram also said the government was confident of bringing down the Consumer Price Index close to 6 per cent. On the economic growth front, Dr. Mayaram said the government was fully focussed on bringing the investment climate back.
“Our potential growth rate is about 8 per cent. It is going to take time, because lot of steps need to be taken to get there. In the next three years we should reach 7 per cent,” he added.
