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Cong Wants Rate Cut by RBI As Inflation Hits Zero Level

New Delhi
Cong Wants Rate Cut by RBI As Inflation Hits Zero Level
outlookindia.com
-0001-11-30T00:00:00+0553

With wholesale inflation touching zero, Congress today demanded in the Lok Sabha that RBI should cut interest rates, contending that the fear of deflation is looming large.

"Zero inflation calls for a rate cut," said M Veerappa Moily, former Corporate Affairs Minister, while participating in a debate on the amendments to the Companies Bill.

Underlining that a rate cut was essential to boost growth, he said, "Industrial output is contracting, Indian economy is staring at deflation, and lay offs are happening.. Despite that we do not see the signals. We are blind to the signal."

The WPI inflation dropped to zero in November, from 1.77 per cent in the previous month. The retail inflation too is at a multi-year low of 4.38 per cent.

The Reserve Bank has held interest rates steady since January in view of high inflation. But a decline in the rate of price rise in recent times have bolstered the demand of industry for a rate cut to boost growth.

The RBI factors in retail inflation while formulating its monetary policy.

Finance Minister Arun Jaitley too on several occasions had nudged the RBI to cut rates.

RBI Governor Raghuram Rajan has emphasised that interest rate cut by itself would not lift the economy.

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