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Chief Economic Advisor Arvind Subramanian said that the Reserve Bank of India (RBI) may ease the interest rates further in the lines of minimum inflation conditions.
"The way I view is that RBI has a mandate to bring down inflation and keep it low and given the inflation has been coming down, that opened up the space for monetary policy easing and RBI has begun that," said Arvind Subramanian, who was at Davos to attend the World Economic Forum Annual Meeting.
"The RBI's own statement says that this is not just a change in rate, but a shift in its monetary policy stance provided inflation remains low and there could be more easing," Subramanian to reporters at the WEF summit that ended this weekend.
ICICI Bank's Chanda Kochhar and Kotak Group's Uday Kotak, were there among business leaders and bankers, said at the WEF that the RBI may correlate the policy rates with the under control inflation levels.
RBI has reduced repo rate by 25 base points to 7.75 in its early monetary review on January 15th. This easing came first time after March 2013.
"We will have to wait for the World Bank to measure how these efforts have helped in terms of ranking. Besides, the real measure will be seen in terms of actual investments that would flow in.", said Subramanian.
The RBI rate cut follows decline in inflation as well as the commitment of the government to stick to the fiscal deficit target of 4.1 per cent of the GDP in the current financial year.
Subramanian also expressed confidence in the reformation of Land, Labour Laws and improvised, transparent clearance system, will enable foreign investors to look at India.
-Kannamsai
