Favourable situation for a rate cut: Ashok Lavasa—सविस्तर माहितीसाठी Business Standard मधील बातमी वाचावी.

Ashok Lavasa, finance secretary with the central government, to Arup Roychoudhury on the case for interest rate cuts, lagging private investment and whether Air India should continue with the government. Edited excerpts:

Is there a case for a rate cut by the Reserve Bank of India, with the current macro economic data?
There is a view that interest rates should come down. And, the fact that inflation is well within the target that RBI and the government have agreed upon — should that be a factor to persuade RBI to lower rates? Lower rates will always help in pushing up investment. I think the situation is favourable (for a rate cut) and the Monetary Policy Committee (chaired by RBI’s chief) and the Centre will take a view on that.

There have been a number of publicised achievements of the Modi government in terms of economic policy over three years. What could have been done better and what should the focus be on over the next two years?

The government has focused on its priorities and been consistent in policy making. Overall, there has been a lot of push, effort, and success in strengthening governance systems. That has been a distinct feature of this government’s approach. It has dealt with and corrected loopholes in delivery mechanisms and dealt with issues of implementation.

On what could have been better, while the mopping of resources by way of tax collection has been higher than ever before, it is always good to have more to deploy. We would like an improvement in the tax to GDP (gross domestic product) ratio. As we go along, that will be an important priority.

One task is to ensure smooth implementation of GST (the coming goods and services tax). We have to implement the panel report on FRBM (Fiscal Responsibility and Budget Management Act), and to what extent this will require changes in the current law. We also have to take the states along with us on fiscal consolidation — there have been views on their finances. With a lot of state taxes getting subsumed into GST, the ability of states to manage more resources, service old debt and find resources for developmental expenditure are some issues we will have to deal with.

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