It’s time to cut interest rate to boost GDP growth, says economist Charan Singh – ThePrint – ANIFeed

New Delhi (India), November 30 (ANI): EGROW Foundation Chief Executive Officer Charan Singh expressed disappointment over the estimates of 5.4 per cent GDP growth for the second quarter and said corrective measures have been taken should be used to accelerate economic growth and interest rates should be reduced.

India’s GDP grew 5.4 percent in the July-September quarter of fiscal 2024-25, well below the Reserve Bank of India’s (RBI) forecast of 7 percent.

The official data released by the Ministry of Statistics and Program Implementation showed that India’s GDP stood at Rs 44.10 lakh crore for the second quarter of fiscal 2024-25, as against Rs 41.86 lakh crore in the same quarter last year.

India’s economy grew by 6.7 percent in the first quarter.

Charan Singh said he believes interest rate policy needs to be reconsidered

“We followed the United States of America, which had raised the interest rate but also lowered it. If we had raised interest rates, perhaps when America had started cutting its interest rates, we could have followed suit,” said Charan Singh, former RBI chair professor of economics at the Indian Institute of Management Bangalore.

“If we analyze capital formation correctly, the interest rate really needs to be taken into account… otherwise the high-frequency indicators in MoSPI’s press release are quite promising, so I’m not worried.” . I am definitely disappointed and think urgent corrective measures need to be taken,” he added.

Singh suggested measures for faster GDP growth.

“When I look at capital formation, I think the interest rate should be reduced. “At this rate, investors will postpone their decision to take loans for cars or start new industries because they know that interest rates will fall in the near future,” he said.

“Secondly, the inflation target should be between 2 and 6 percent and not 4 percent. In the last 30 years we have never really reached 4 percent. If you look at the average over 30 years, we are around 5.5 to 6 percent. If we raise it to 4 percent, we could stifle growth,” he added.

Charan Singh stressed that the private sector should be encouraged to create a multiplier effect in increasing the government’s capital expenditure.

“In conclusion, I would like to point out that in this growth story of Viksit Bharat, we should be proud that the country’s Prime Minister is thinking as a visionary in the next 25 years. But in the story of Viksit Bharat, the whole thing cannot be done by the government itself. While the government is making efforts by increasing capital expenditure, the multiplier effect must come from the private sector. The private sector needs to be encouraged,” he said. (ANI)

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