Why India needs lower interest rates

Agencies/New Delhi/Hong Kong
Filed on September 22, 2015
Why India needs lower interest rates
Union Finance Minister Arun Jaitley address a gathering during a seminar - PTI photo

India needs lower interest rates, and the central bank must decide how much to cut, Finance Minister Arun Jaitley said.

"India obviously does need cuts but to what extent, I think, is a prerogative of the central bank and they will factor in all these concerns," Jaitley said in an interview with Bloomberg Television in Hong Kong. "Indian inflation is under control," he added, contrasting recent numbers with double-digit figures just a few years ago.

Central bank Governor Raghuram Rajan last month resisted pressure from the Finance Ministry to ease policy. He left borrowing costs unchanged at 7.25 per cent at an August 4 meeting after three cuts this year to meet his inflation target of six per cent by January. The next meeting is on September 29.

Keen on 2016 GST rollout

Meanwhile, Jaitley on Monday expressed his confidence that the new goods and services tax (GST) regime will roll out from the next fiscal year despite the pending issues regarding direct tax.

"Congress is trying to delay the new tax regime. But one must remember, it is a transactional tax and not an income tax," he said here at a Press meet.

Jaitley has gone to Singapore and Hong Kong on a four-day official tour. He expressed his confidence that the GST will be passed in the Rajya Sabha in the next session.

Jaitley, however, added it was not necessary to implement the new regime from April 1, 2016, itself and since it is a transactional tax it can come into effect from the first date of any other month.

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