Finance Secretary Ashok Lavasa said the RBI and the government are in sync on the inflation target.
New Delhi: The Finance Ministry on Tuesday said the 0.25 per cent rate cut by the Reserve Bank of India will inject liquidity in the system and help achieve closer to eight per cent growth in the current fiscal year.
Finance Secretary Ashok Lavasa said the government is taking all measures possible to keep inflation within the range of 2-6 per cent.
"The RBI policy will boost liquidity in the system... On the whole, this is a decision which will go down well with all sections of the economy," he told reporters here.
He said both the RBI and the government are in sync on the inflation target. The government has notified an inflation target of four per cent, with an upper and lower tolerance band of two per cent.
Talking about the impact of the Pay Commission recommendations on inflation, Mr Lavasa said while it will effect some price increase, domestic consumption will also grow.
As for GDP growth, he said: "We have been also saying the economy will inch closer to 8 per cent growth. What exactly that number would be would be difficult to say, but certainly we are looking at better times."
In its monetary policy on Tuesday, the RBI projected a growth rate of 7.6 per cent in the current fiscal year.
NITI Aayog Vice-Chairman Arvind Panagariya tweeted, "A very welcome move by RBI. The positive and optimistic narrative by it will help boost investor confidence."
In the first monetary policy review under RBI Governor Urjit Patel, the interest rate was on Tuesday cut by 0.25 per cent to a six-year low of 6.25 per cent in a unanimous decision by the Monetary Policy Committee.
Asked why banks have not passed rate cut benefits to borrowers, Mr Lavasa said, "It depends on the banks. Banks take their own decision based on market sentiment."
Mr Lavasa said the RBI deserved to be complemented as it has maintained the liquidity in the market well even after handling the $20 billion worth FCNR bond redemption.
"RBI has managed that position well and we have to be satisfied about that," he said.
In its fourth bi-monthly monetary policy of this fiscal on Tuesday, the RBI said liquidity conditions have remained comfortable in the third quarter, with the central bank absorbing liquidity on a net basis through auctions.
"Liquidity was injected through open market purchases of Rs 20,000 crore in line with the system's requirements," the RBI said.
Finance Secretary Ashok Lavasa said the government is taking all measures possible to keep inflation within the range of 2-6 per cent.
"The RBI policy will boost liquidity in the system... On the whole, this is a decision which will go down well with all sections of the economy," he told reporters here.
He said both the RBI and the government are in sync on the inflation target. The government has notified an inflation target of four per cent, with an upper and lower tolerance band of two per cent.
Talking about the impact of the Pay Commission recommendations on inflation, Mr Lavasa said while it will effect some price increase, domestic consumption will also grow.
As for GDP growth, he said: "We have been also saying the economy will inch closer to 8 per cent growth. What exactly that number would be would be difficult to say, but certainly we are looking at better times."
In its monetary policy on Tuesday, the RBI projected a growth rate of 7.6 per cent in the current fiscal year.
NITI Aayog Vice-Chairman Arvind Panagariya tweeted, "A very welcome move by RBI. The positive and optimistic narrative by it will help boost investor confidence."
In the first monetary policy review under RBI Governor Urjit Patel, the interest rate was on Tuesday cut by 0.25 per cent to a six-year low of 6.25 per cent in a unanimous decision by the Monetary Policy Committee.
Asked why banks have not passed rate cut benefits to borrowers, Mr Lavasa said, "It depends on the banks. Banks take their own decision based on market sentiment."
Mr Lavasa said the RBI deserved to be complemented as it has maintained the liquidity in the market well even after handling the $20 billion worth FCNR bond redemption.
"RBI has managed that position well and we have to be satisfied about that," he said.
In its fourth bi-monthly monetary policy of this fiscal on Tuesday, the RBI said liquidity conditions have remained comfortable in the third quarter, with the central bank absorbing liquidity on a net basis through auctions.
"Liquidity was injected through open market purchases of Rs 20,000 crore in line with the system's requirements," the RBI said.
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