India's central bank governor Bimal Jalan on Saturday said the country's economic outlook was buoyant and interest rates were unlikely to rise.
"At the moment, market conditions are very favorable. In the next few months there will be no change in the liquidity or interest rates, " Jalan told a business conference here.
He said the economic outlook was positive in the foreseeable future as the government's borrowings were at a targeted level.
The bank governor said a cut in interest rates was possible provided economic indicators such as fiscal deficit came down.
"There has already been some softening in rates. We would like it to be more, but that would depend on these macro economic indicators," Jalan said.
Indian industry has been lobbying for a cut in interest rates, arguing that the cost of borrowing capital left domestic firms at a disadvantage with foreign competitors in India.
India's bank rate -- the rate at which the central bank lends to other commercial banks -- is currently about eight percent. Commercial banks extend corporate loans at about 11.5 to 12 percent.
In a speech on globalization, Jalan urged the captains of the industry to reduce waste and improve efficiency in order to keep costs down.
"Our real interest rates are high, costs are high because of the gigantic waste of natural resources," he said.
Jalan said Indian industry would need to be competitive on all fronts in order to match steps with giant global corporations -- NEW DELHI (AFP)
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