Finance minister P Chidambaram today made a fresh call for an interest rate cut by the Reserve Bank of India (RBI), saying that the Budget 2013-14 has laid the foundation for fiscal consolidation, thereby clearing the path for an RBI policy review.
He wanted the RBI to take into account the fiscal consolidation path shown in the budget while taking a call on interest rate in its coming policy review on 19 March.
He said the union budget for fiscal 2013-14, presented against the backdrop of a slowdown in both global and domestic economic growth, is expected to lay the foundation for a sustainable rebalancing of government finances.
''It is expected that the move towards fiscal consolidation will impart confidence in the economy, support domestic and foreign investments and will boost supply side initiatives,'' he said.
The finance minister said the budget provides for 15 per cent investment allowance, which will be a boost to the manufacturing sector. He said the budget also focuses on infrastructure investment to restart the growth engine and that it has addressed divergent constraints in this regard.
Chidambaram said the budget has also announced various measures like introduction of inflation-indexed bonds to protect savings of the poor and the middle class from inflation.
He hoped that these measures would also incentivise the household sector to save in financial instruments rather than purchase of gold.