By IANS,
New Delhi : Concerned over high inflation rate, fuelled by rising food prices, Finance Secretary Ashok Chawla Friday said the steps by the central bank to curb liquidity were adequate and assured that interest rates will remain intact.
Reacting to the hike of 75 basis points in the cash reserve ratio for commercial banks, Chawla said his ministry’s view was that this move was in the right direction apart from being appropriate and adequate.
“This will have an impact on excess liquidity in the system,” the finance secretary told reporters here as the hike in cash reserve ratio is expected to suck Rs.36,000 crore ($7.2 billion) out of the system.
“But interest rates are unlikely to go up.”
Chawla said the impressive growth of 7.5 percent forecast for this fiscal by the Reserve Bank was in line with the government’s own projection, and shows that the growth process is on track.
“This should be a good sign for trade,” he said, alluding to a high growth leading to greater demand for goods and services that can, in turn, add to the bottomlines of the corporate sector.