Jaitley pitches for interest rate cut ahead of RBI policy

"The government has stuck to fiscal deficit commitments and inflation has been under control. Therefore, I do hope that this movement will continue in order to make our economy more competitive with more competitive interest rates," he said while addressing the Confederation of Indian Industries (CII) Annual session

Reserve Bank will hold its first bi-monthly monetary policy review for 2016-17 on Tuesday

The finance minister also stressed that the debate on crucial economic issues, like interest rates, should move in the right direction in India, which is a "large and noisy democracy"

"Take for instance responsible political groups taking a position to support high interest rates for something which is absolutely capable of making us a sluggish economy," Jaitley said

The finance minister said there are a number of challenges in a large and noisy democracy and the most important for institutions like government and industry is to make sure that the debate on issues moves in the right direction

This will "enable Indian society as the world's largest democracy and an aspirational democracy to add maturity to that debate", he said

As regards retired persons who depend on interest income, he said their issues could be addressed by pension funds, which offer best returns

Jaitley said national pension scheme is providing attractive returns, adding "people will have to look at these products"

In the long run, deposit and lending rates should come down in order to make the economy more competitive, he said, adding the direction of the debate has to be mature

"The movement in last one year, as far as the interest rates have been concerned, has been downwards," Jaitley said

The government has stuck to fiscal deficit consolidation path, pegging the deficit for the current financial year at 3.5 per cent of GDP. In 2015-16, the fiscal deficit will remain below the budgeted targeted of 3.9 per cent

As far as inflation is concerned, while Wholesale Price Index (WPI) has been in negative zone for past 16 months, Consumer Price Index (CPI) is hovering in the range of 5-6 per cent.