After RBI’s surprise rate cut, Govt wants rating agencies to mellow down

Just days after the Modi government presented the Union Budget 2015, the Reserve Bank of India (RBI) today lowered its policy repo rate by 25 basis points to 7.5%. Following this surprise by India’s apex bank, Chief Economic Advisor Arvind Subramanian asserted that the global rating agencies should consider upgrading their stance on the credit outlook of the country.

"Now we have a 50 basis points rate cut (in two tranches within two months) and I think that is good for the economy and all rate cuts benefits... If the outlook is looking good, the rating agencies should draw their lessons from that on improving the outlook," a PTI report quoted Subramanian as saying.

However, after the presentation of budget for the upcoming fiscal, global and domestic agencies had ruled out any immediate upgrade in India's sovereign ratings.

"It (rate cut) shows that RBI and government are on the same page in terms of how we view the economy. It also means that Budget can be seen as conducive to non-inflationary growth," said Subramanian.

Revealing about the on monetary policy framework agreement, Subramanian informed that both the Ministry of Finance and Reserve Bank of India have expressed apprehension about rising prices.
(Image: The Economic Times)