NEW DELHI: Minister of State for Finance Jayant Sinha on Thursday said that the surprise 25 basis point rate cut by the Reserve Bank of India two weeks ahead of the next credit policy marks turn of the economic cycle.
“It is not just a rate cut. It is the turn of the cycle and that is what is important here. What we have demonstrated now is that the economic momentum is picking up and the investments that are coming in, said Sinha.
He added that the credit for rate cut should be attributed to the political leadership of the Prime Minister Narendra Modi and Finance Minister Arun Jaitley.
Speaking to a private news channel Sinha said: “I think it is all about the power of leadership... I think the credit (for rate cut by the RBI) should go to the political leadership, to our honourable Prime Minister and Finance (Arun Jaitley).”
“We are pursuing prudent fiscal policies saying that are committed sound economic m a n a g e - ment, fiscal roadmap of 4.1 per cent, 3.6 per cent, 3 per cent. That is how we have led and when we lead then obviously all the other institutions follow,” he added. The minister said the government has demonstrated its will for economic reforms and that signal has now been fully amplified by the RBI in terms of the rate cut and so the economy is moved through an inflection point.
To the query whether fiscal deficit target of 4.1 per cent of the GDP in the current fiscal was possible, Sinha said: “It is not just a question of achieving the numbers, the quality of the numbers, the integrity of the accounting that stands behind them.”
The minister noted that to grow 7-8 per cent, India will have to build productive capacity and work through the supply-side bottlenecks. He said the government has been working towards improving infrastructure like power to the revival of manufacturing sector. described RBI, the bank as an extraordinarily competent and professional organisation.