Pitching for cut in interest rates by the RBI in its forthcoming monetary review, the finance ministry today said low interest rate regime would push growth rate, which slipped to nine-year low of 6.5 per cent in 2011-12. When asked by reporters about government's views on the interest rate scenario Department of Economic Affairs Secretary R Gopalan expressed confidence on the possibility of growth picking up, if interest rates are reasonable. He said, the Reserve Bank would take into account the inflationary situation and external factors while deciding on the interest rate stance in its policy review on June 18.

Gopalan said the growth prospects of the economy are improving on the back of falling crude oil prices and gold imports. These two factors would help bring down current account deficit (CAD). Besides, savings rate in the January-March quarter has shown improvement. He said, the government expects the economy to grow at 7.6 per cent in the current fiscal. Gopalan also said the government has to address issues of fiscal deficit and CAD for economic growth.

After growing at 8.4 per cent in two consecutive fiscals, the economic growth rate fell to 6.5 per cent in 2011-12 mainly on the back of lower manufacturing sector output.

On Rupee, the secretary said, the nervousness in the eurozone and the crude oil prices had resulted in lowering of the value of the domestic currency.