Jaitley, Rajan Hopeful of Lower Rates on Good Monsoon

Jaitley said that India can also improve upon its GDP growth rate if there is \"a moderate monsoon or a good monsoon\".

Published: 19th April 2016 06:57 PM  |   Last Updated: 19th April 2016 06:57 PM   |  A+A-


NEW YORK: Government and RBI today were hopeful of lower interest rates if inflation continues to cool down and monsoon turns out to be good.

"I am sure if this trend of containing inflation continues, we can hope for a better interest rate regime which in turn will have a spiral effect on improving upon India s productivity and generate more activity," Finance Minister Arun Jaitley said here.

Reserve Bank Governor Raghuram Rajan, who is also in the US, separately said he is closely watching the inflation data and the monsoon rain forecasts for deciding on further interest rate cuts and his monetary policy remains in "accommodative mode".

Rajan, who had earlier this month cut interest rates by 0.25 per cent to 6.5 per cent, however, did not give any clear indication as to how much or by when further rate cuts would take place.

"We are watching the development of inflation and we are also looking for signs of a good monsoon. As evidence builds up one way or the other, it will give us more information of how the trajectory of the monetary policy will be," he said at the Inaugural Kotak Family Distinguished Lecture at the Columbia Law School here yesterday.

Consumer price inflation eased to 6-month low of 4.83 per cent in March from a year earlier. It was 5.26 per cent in February. Rajan wants to limit inflation to 5 per cent by March 2017 and good monsoon will lead to higher crop output.

"We are still in accommodative mode but precisely how much and when we will have to see," Rajan said to a question on impact of monsoons on interest rates at the lecture.

After two years of drought, the weather department last week forecast the first above-average monsoon in three years.

Jaitley said that India can also improve upon its GDP growth rate if there is "a moderate monsoon or a good monsoon".

In the last one and half years, RBI has reduced interest rate by 1.50 per cent and the rates have come to their lowest level in about five years. Still, the industry has been demanding further rate cuts to stimulate investment and boost growth.

Stay up to date on all the latest Business news with The New Indian Express App. Download now


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp