Loan EMI increased Now the government has raised the demand to provide help. Commerce and Industry Minister Piyush Goyal on Thursday said the Reserve Bank of India (RBI) should cut interest rates and accelerate growth. Goyal, a chartered accountant turned politician, said in a television program that due to food inflation, the RBI has not been able to take any action to fix the rates for two years. Using food inflation to determine interest rates is a “flawed theory.” Goyal said: “I think they should cut interest rates. It is necessary to continue promoting growth. “We are the fastest growing economy in the world and we can do even better.”
RBI governor declined to comment
Later in the same programme, RBI governor Shaktikanta Das refused to comment on the chief minister’s suggestion. He said the six-member tariff fixation committee will take an appropriate decision in its next meeting to be held in the first week of December. Goyal’s demands were also supported by financial industry veteran Deepak Parekh. He said the RBI should reduce the repo rate and also consider the cash reserve ratio (CRR). Chief Economic Advisor (CEA) G. Ananth Nageswaran had suggested not including food inflation in the calculation of headline inflation. Goyal said he has been in favor of not including food inflation in rates for the last 20 years, even when he was in the opposition.
Retail inflation reached 6.2 percent in October
He said: “I have consistently said that it is a wrong principle that food inflation should be considered when deciding on the structure of interest rates. Food inflation has nothing to do with inflation management. “This is a supply and demand situation.” Goyal, who previously held the Consumer Affairs Ministry, said that storage or hoarding of food grains is not done on a large scale. “Now is the time for policy makers and regulators to sit down seriously, discuss with all stakeholders and economists and come to a conclusion on whether food inflation should be part of inflation decision making.” or interest rates,” he said. It is worth noting that the RBI under Das had earlier objected to such arguments. Retail inflation touched 6.2 per cent in October, higher than the target set by the government for the RBI.
Inflation will decrease in December and January
Goyal said inflation will decline in December and January once the base effect comes into effect. He said other factors like festive season etc. also influence the high CPI numbers. He said there has been coordinated action between the RBI and the government to reduce inflation for the last five-six years and the last decade has seen the lowest inflation during the tenure of any Prime Minister in the history of India. . Meanwhile, the Trade Minister said there is a “massive” increase in private capital spending and that companies will have to consider cutting costs to increase sales in a market of 140 million consumers.
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