New Delhi: Surprised over the timing of RBI'srate cut, former central bank governor C Rangarajan said the Union Budget was not a good enough trigger for easing of rates and he had expected RBI to wait till next month. Rangarajan, who has also served as Chairman of Prime Minister's Economic Advisory Council during the previous UPA regime, said there was a need for rate cut but he was surprised at its timing.
"I am not in disagreement with RBI on rate cut. But I am surprised at the timing of the rate cut. I expected the RBI to cut rates in April meet," Rangarajan said. RBI is scheduled to hold its next policy review meet on April 7, but it announced a 25 basis points rate cut this morning itself the second such surprise cut outside the regular policy review in less than two months.
Rangrajan said the government has not done enough to reduce subsidies, which have come down on account of fall in global crude prices. The oil prices may harden a bit going ahead, he added. "Monetary policy framework pact may have induced RBI to cut rates and Budget was not the catalyst for rate cut. But I feel RBI should continue to press government for lower fiscal gap," Rangarajan said. Replying to query on the scope of further cuts, Rangarajan said, "We need to see where consumer price inflation and wholesale inflation will be and the point is what is going to happen to fiscal consolidation and revenue projections." "RBI as a watchdog should look into fiscal consolidation and see what is being done and how it is done," he added.
