Conditions favourable for interest rate cut: Jaitley

Last Updated 06 August 2015, 15:23 IST

Conditions are favourable for further interest rate cut by the Reserve Bank as commodity prices are low and prospects of Kharif crop are good, Finance Minister Arun Jaitley said today.

"I think there is a lot of positive hope that I have. There is room for optimism," he said when asked whether there is elbow room for cut in interest rate by the Reserve Bank.

Global crude oil prices from the point of view of India are "as good as they can be. Commodity prices world over are generally low. Rain God has been kinder to us this year...", he said.

In an interview to CNBC TV18, Jaitley said things are "favourable" for easing of monetary policy, adding that even though there is slight inadequacy in rainfall, the geographical spread and the time schedule are such that "we are expecting a very good crop".
He also said food inflation is under control.

In third bi-monthly monetary policy review this fiscal, RBI maintained status quo on key interest rate, but said it could cut them ahead of the next policy on September 29 depending upon macro-economic data. In 2015, RBI has cut interest rate in three tranches by a total of 0.75 per cent.

"RBI is a professional organisation. It's an institution and therefore, an institution takes lots of factors into consideration," Jaitley said, adding they are as much concerned about the state of economy as the government and will take a balanced view.

Replying to questions on PSU disinvestment, the Finance Minister said government has a schedule for it, but cannot be disclosed in advance as then "you find lot of stock market practices which go to attack those particular schedule".

"There is an element of surprise which we have to give to market also and therefore please wait for the next few weeks," Jaitley added.

While going in for disinvestment, he said, government will take all take the market conditions into account. It plans to garner Rs 69,500 crore from divesting its stake in Public Sector Undertakings (PSUs).

On constitution amendment bill to roll out GST, which is stuck in the Rajya Sabha due to political logjam, Jaitley he hoped "better sense" would prevail and opposition would allow the government to go ahead with the indirect tax reform.

When asked if the government was looking at new deadline for roll out of GST, Jaitley said he was not going to give up hope.

"Its my job to pursue and pursue it seriously. There are many other options available in the politics... I would say the deadline of April 1, 2016 is an ideal deadline. It's the deadline which not only Central government but state governments also want," he said.

The government plans to roll out GST from April 1, 2016. The constitution amendment has been passed by Lok Sabha. After approval of Rajya Sabha, it has to be ratified by 50 per cent of the State Assemblies.

(Published 06 August 2015, 15:23 IST)

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