Chidambaram unhappy with RBI not cutting rates

Last Updated: Tue, Oct 30, 2012 09:40 hrs

New Delhi, Oct 30 (IANS) Finance Minister P. Chidambaram Tuesday expressed unhappiness over the Reserve Bank of India's decision to not cut key policy rates, saying the government would walk alone to face the challenge of growth.

"Growth is as much a concern as inflation. The government has to walk alone to face the challenge of growth... Sometimes it is best to speak and sometimes it is best to be silent. I think this is a time for silence," Chidambaram said, making his anger apparent on the RBI's policy.

A day before the RBI policy review, the finance minister had announced a five-year road map for fiscal consolidation, setting a target of cutting the fiscal deficit to 3 percent by 2016-17 from 5.8 percent recorded in 2011-12.

"The government is doing its best to send a clear message that we are on the path of fiscal consolidation and it is my hope that everybody will understand the government's commitment of fiscal consolidation," Chidambaram said.

In the second quarter review of monetary policy for 2012-13, the RBI Tuesday lowered the cash reserve ratio (CRR) by 0.25 percent (or 25 basis points) to 4.25 percent, but kept other policy rates unchanged.

In the policy review, the RBI kept the repo rate, the rate at which it lends to commercial banks, unchanged at 8 percent. The reverse repo rate, the rate at which the apex bank borrows money from commercial banks, is also kept unchanged at 7 percent.

High interest rates have adversely affected investments and industrial growth.

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