The Finance Minister Pranab Mukherjee on Tuesday said that the Reserve Bank of India, RBI's decision to cut lending rate by 0.50 per cent, will encourage investments. He assured that the government will also take additional steps to boost growth and control price rise. Talking to reporters in New Delhi, Mr. Mukherjee said, the growth which has weakened in the past months, would now improve.
The Finance Minister said, moderation of core inflation rate for four months in a row and sharper decline in inflation for manufactured products from 7.6 per cent in December to 4.87 per cent in March, has facilitated the change in monetary policy stance.
In its annual monetary policy statement for 2012-13, the RBI, after a gap of three years, has cut interest rate by 0.50 per cent, making the credit cheaper.
AIR Correspondent reports that after clocking over 8 per cent economic growth for two years, India's GDP expansion is estimated to have declined to a 3-year low of 6.9 per cent in 2011-12 on account of high cost of borrowing that slowed investments. RBI had hiked policy rates 13 times between March 2010 and October 2011 to control persistently high inflation. It has projected the GDP growth for this fiscal at 7.3 per cent, which is lower than the government estimates of 7.6 per cent for the period.