Govt advises RBI to cut repo and reverse repo rate

The government has advised RBI to cut repo and reverse repo rate by 100 basis points each, according to economic adviser to the prime minister Suresh Tendulkar.

The timing of the rate cut would be decided by the central bank which has a better fix on liquidity and credit growth. The PM has indicated that it is desirable to cut interest rates, he said.

According to Mr Tendulkar, GDP growth may fall below 7% this year, though there is no objective reason for this to happen. He felt that inflation should be between 4 and 6% y March or even earlier given the drop in commodity prices world over.
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