Interest rates may come down further: FM

With inflation declining to single digit level, P Chidambaram said interest rates may soften further and also made a case for revisiting reforms to make the economy more competitive.

With inflation declining to single digit level, Finance Minister P Chidambaram on Monday said interest rates may soften further and also made a case for revisiting reforms to make the economy more competitive.

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Addressing the Economic Editors' Conference in New Delhi, the finance minister said Indian economy would continue to grow at 7-8 per cent-- the second fastest rate in the world-- this fiscal and asked analysts not to describe the Indian economy as slipping into recession even though the country faces a difficult situation.

"If the rate of inflation continues to decline, policy rates may also moderate and the bias in favour of growth may deepen... RBI's policy is now biased towards stimulating growth," he said.

Replying questions on interest rates, the finance minister said many public sector banks had already reduced their home loan rates by 75 basis points. However when probed further as to why private sector lenders are not responding, he said, "I cannot give any advice to private sector banks."

Even as India experienced the impact of global financial crisis on the equity and forex markets directly and on the money, debt and credit markets indirectly, Chidambaram said the macroeconomic fallout has been muted due to the overall strength of domestic demand and predominantly domestic nature of financing investment.

However, there is a silver lining in this crisis, he said adding, "We have to seize the opportunity to review and revisit pending reforms. As and when required, we must introduce measures, particularly in the financial sector, to make our economy more competitive," he said.