The Reserve Bank of India on Wednesday left lending rates unchanged, citing risks to inflation due to spurt in farm loan waivers by states. However, it raised the lending capacity of banks to support economic growth.
The government has been pressing for a cut in interest rates to increase private investment, and had sought a meeting with the members of the Monetary Policy Committee, but RBI Governor Urjit Patel said that all of them declined to meet.
The RBI also said that they expect retail inflation to fall to 2-3.5 percent in the first half of current fiscal.
However, it can move up to 4.5 percent in the second half as rush for farm loan waivers may have inflationary spillovers, the RBI said.
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