Nirmala Sitharaman, India's finance minister, minimized any risks to economic expansion while advocating for lower interest rates. For more than two years, the Reserve Bank of India has maintained its current interest rates. Sitharaman comes after Commerce Minister Piyush Goyal, who made the case for a rate decrease last week, claiming that additional stimulus was necessary for economic growth.
Following the central bank's decision to hold rates constant for the tenth consecutive meeting in October, RBI governor Shaktikanta Das declined to respond to Goyal's remarks. Das stated that a rate drop at this time would be "Very risky." The governor went on to say that easing won't be taken into consideration until inflation hits the 4% target set by the central bank.
The RBI's next policy decision is set for December 6th. Speaking at an event, Sitharaman stated that given India's economic needs, there are "many different voices saying the cost of borrowing is really very stressful." She continued: "Bank interest rates will have to be far more affordable."
The Reserve Bank of India expects 7.2 percent growth in the current fiscal year, which ends in March 2025. However, other analysts, particularly those at investment firms such as Goldman Sachs, have forecast growth as low as 6.5%. Worries about customers cutting back on spending are fueled by low sales of all commodities, from soap to cars.
However, Sitharaman downplayed the growth risks, stating that the government is keeping a close eye on the economy and is prepared to take "all necessary measures" to boost economic activity. She went on noting robust economic fundamentals, "Let me assure you the government is fully aware of the challenges posed by both domestic and global factors. There is no cause for undue concern."
