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Rate cut on small savings will not hit collections: C Rangarajan

Speaking about the current account deficit, Mr Rangarajan said CAD as a percentage of GDP is expected to be higher in FY12-13 at about 5%

March 26, 2013 11:18 IST | India Infoline News Service
The Finance Ministry move to cut interest rates by 0.1% on certain small savings schemes such as NSC will not hit collections in such schemes, C. Rangarajan, Chairman to the Prime Minister’s Economic Advisory Council (PMEAC) said on Monday.

Mr Rangarajan told reporters on the sidelines of the 31st Skoch Summit in New Delhi.
According to Rangarajan, there is also scope for further repo rate (rate at which RBI lends to banks) cut by the Reserve Bank of India if core inflation were to remain below 4%.

The country’s core inflation declined 3.8% in February 2013 from 4.1% in January 2013.

Banks will be considering at an appropriate opportunity to act on their lending rates… as Government expenditure picks up in March, the liquidity position of banks may also improve, Mr Rangarajan added.

Speaking about the current account deficit, Mr Rangarajan said CAD as a percentage of GDP is expected to be higher in FY12-13 at about 5%.

At the same time, he mentioned that the capital flows will be adequate to cover CAD for the current fiscal.

For FY13-14, Mr Rangarajan expects CAD to be lower than FY12-13 and capital flows covering that will not be a problem. He expects the Indian economy to grow at 6.5% for FY13-14.



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