Maran wants interest rate cut

Maran wants interest rate cut

NEW DELHI, MARCH 31: Commerce Minister Murasoli Maran said on Friday he was hopeful of a reduction in interest rates when the Reserve Bank of India (RBI)'s credit policy is announced on April 27.

India's real interest rates are among the highest in the world despite a low inflation rate and this has led to demands for lending rate cuts from the current levels of 12 per cent for prime borrowers.

The bank rate - at which the RBI refinances banks - is currently eight per cent and the banks' cash reserve ratio (CRR) is set at nine per cent. Government bonds rose in Friday afternoon trade spurred by hopes of a CRR cut to facilitate government's borrowing programme for 2000/01 (April-March).

Indian exporters get pre-shipment and post-shipment credit at concessional rates of 10 per cent and can avail foreign credit at rates linked to the Libor. But they have been hit by a government decision to tax 20 per cent of their income from 2000/01. Their entire income will become taxable over a five-year period.