``We cannot live with this high level of interest rates,'' Sinha told reporters here. Discounting reports that finance secretary Vijay Kelkar had agreed with RBI's stand that interest rates would not be lowered, Sinha said the timing of further reduction in interest rates would be decided by RBI at the appropriate time. Sinha's argument for further cut in interest rates is expected to create more confusion among exporters and businessmen.

The confusion over the ministry's thinking arose after Kelkar and Commerce Minister Ramakrishna Hegde said a couple of days ago that the interest rates have to move southwards even though the RBI governor ruled out a reduction ofrates. Retracting their statements, Kelkar and Hegde said earlier this week that they "understood" RBI's position and ruled out interest rate cut. RBI is scheduled to announce its credit policy for the current financial year on April 20.

After announcing the Exim policy, Hegde had come out strongly against the RBI's move to hike the export credit rate by one percentage point with effect from April 1. ``Many of us in the government are obsessed with short-term results. It is like penny wise and pound foolish,'' Hegde had said last week.

Reacting to the statements of Kelkar and Hegde, Jalan had said ``there is no possibility of reduction of the rate (on export credit) as it is already lower by one per cent at 10 per cent than the last year. ``The cost of funds to bank comes at about 8 to 8.5 per cent which makes it difficult to further reduce the rate,'' Jalan had said.

Later, Kelkar, who visited Mumbai two days ago, had indicated that there would be no drop in interest rates as it could lead to higherinflation. ``The real solution lay in reducing government expenditure... as long as government borrowings are heavy there is limited maneuverability of monetary policy," he said, admitting interest rate policies were in Reserve Bank of India's domain.

On the depreciation of the rupee, Sinha said the government has no role to play on the matter and it was upto RBI to take a stand. Sinha said it was also the responsibility of the RBI to keep a watch on the forex market and this they had been doing. The rupee had depreciated by a whopping 27 paise on Tuesday, plunging to an over 7-month low of Rs 42.68/71 on a knee-jerk reaction to the political uncertainty.

The finance minister also expressed the hope that the finance bills will be passed without any difficulty during the coming session of Parliament.

"We will get all the bills passed," Sinha said.

On the possibility that political uncertainty would create some problem in the passing of Budget, he said, "I see no political uncertainty and the currentinstability will vanish within a few days after Parliament assembles."

"I am sure they will adopt constructive approach as far as the passage of Budget and Finance Bill are concerned,'' he said adding each one of them (parties) are aware of the difficulties that arise, the damage that will be done to the system if the Budget or Finance Bill is stalled or delayed."