New Delhi: Finance minister Nirmala Sitharaman has echoed a growing clamour for interest rate cuts citing the requirement of Indian industry to meet the goal of Viksit Bharat. While speaking at the centenary celebration of SBI’s first branch in Mumbai, Sitharaman said some sections of society may find the current lending rates stressful.
Sitharaman’s speech comes days after Union minister Piyush Goyal urged RBI governor Shakitkanta Das to slash the report rate. He also stated that targeting food inflation was futile and this component should be removed from the retail inflation basket.
Why FM is calling for rate cut?
Finance minister Sitharaman did not wade into the debate on what should constitute India’s retail inflation basket. India’s retail inflation print jumped to a 14-month high of 6.21 per cent in October 2024, according to official data.
Banks’ lending rates are indexed to the repor rate which is decided by thye RBI’s monetary policy committee on a bi-monthly basis. The RBI’s primary goal is to target inflation and keep it within the 4 per cent target. There is a +/-2 per cent wingspan for inflation. Anything above the 6 per cent mark rings alarm bells for the central bank.
FM Sitharaman on inflation
Calls for a rate cut have risen after the US Federal Reserve slashed the key rate in two meetings by 90 points to 4.50-4.75 per cent. Finance minister Sitharaman acknowledged that inflation had risen, but emphasised that this was driven by price pressure in 2-3 items such as onions, tomatoes and potatoes. She went on to add that the Indian economy was stable and potential concerns around a slowdown were unfounded since economic growth indicators pointed to another story.
The finance minister also emphasised the importance of loans to MSMEs. She set a Rs 6.12 lakh crore MSME lending target for banks for FY26. Sitharaman urged banks to raise it to Rs 7 lakh crore in FY27. The target for FY 25 was Rs 5.75 lakh crore.
Finance minister Nirmala Sitharaman has called for lower interest rates on loans offered by banks to lower the cost of borrowing and push towards the goal of Viksit Bharat. Here’s why Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
