RBI may be able to cut interest rate as inflation eases: FM

New Delhi, Nov 23: Finance Minister P Chidambaram on Friday expressed hope that the Reserve Bank would be able to reduce key interest rate with the further easing of inflation.

"As inflation eases further, there will be an opportunity for monetary policy to take measures to mitigate growth risks," he said in a written reply to the Lok Sabha.

Chidambaram said that high inflationary pressures had necessitated the adoption of tight monetary policy by the RBI.

Besides other factors, tightening of monetary policy by the RBI to control inflation has resulted in slowing down of investment and growth.

While RBI kept interest rate (repo rate) unchanged in its last policy review, it reduced the Cash Reserve Ratio or CRR (percentage of deposits banks keep with RBI) by 0.25 per cent.

The RBI is scheduled to announce its mid quarter review of the monetary policy on 18th December.

With some moderation in inflation, there has been relaxation in the monetary policy stance. CRR has been reduced to 4.25 per cent in phased manner and repo rate has been cut by 50 basis points.

Inflation for September, as measured by the wholesale price index (WPI) was 7.81 per cent. RBI expects the March-end inflation at 7.5 per cent.

Chidambaram also said the government has taken several measures to revive growth in the economy.

India's growth rate slowed to 5.5 per cent in the first quarter of the current fiscal, from 8 per cent in the year-ago period.

Industry has largely blamed the high interest rate regime, among other things, for the slowdown as it raised borrowing costs and curbed consumer spending.

Govt hopeful of achieving Rs 30,000 cr disinvestment target

Encouraged by the success of Hindustan Copper disinvestment, Finance Minister P Chidambaram exuded confidence that govt would be able to meet the Budget target of raising Rs 30,000 crore from stake sale in public sector undertaking during the current fiscal.

"I am happy that issue has been fully subscribed. This is the resumption of the disinvestment process and we will go forward with the disinvestment processes as approved by the CCEA between now and March," Chidambaram told reporters in New Delhi on Friday.

"I hope that we can collect the targeted Rs 30,000 crore," he added.

The government's sale of 4 per cent stake in Hindustan Copper was over-subscribed on Friday.

A total of 3,89,12,793 shares, worth Rs 603.14 crore, were bid for at the close of trading hours, according to the data available from the stock exchanges.

The bids received were more than 3,70,08,720 shares, or 4 per cent shareholding, that were put on offer in the first tranche.

The shares were offered at Rs 155 apiece, a 41 per cent discount to Thursday's closing price of HCL on the BSE.

The government has decided to disinvest minority stake in Rashtriya Ispat Nigam Ltd, Hindustan Aeronautics Ltd, Bharat Heavy Electricals Ltd and Steel Authority of India Ltd.

Besides, stake sale in Hindustan Copper Ltd, MMTC Ltd, National Aluminium Company Ltd Oil India Ltd, NTPC Ltd and NMDC Ltd would also take place during the current fiscal.