NEW DELHI: India's finance minister is likely to meet the head of the Reserve Bank of India in New Delhi on Monday to urge the central bank to cut interest rates at a policy meeting the following day, two senior finance ministry officials said.
Arun Jaitley wants the RBI Governor Raghuram Rajan to cut interest rates to support economic growth, one of the officials told Reuters on Thursday.
"A rate cut is needed now," the source said. "It can help the auto and housing sectors."
The RBI's policy repo rate is currently 8.0 percent and, while most analysts believe Rajan will wait until early next year to order a reduction, markets have begun pricing in a cut to 7.75 percent.
Data due to be released on Friday is expected to show growth fell back to 5.1 percent year-on-year in the July-September quarter, after speeding up to 5.7 percent in the previous quarter, according to a Reuters poll.
"The second quarter (of the fiscal year) is always challenging. The number could be lower than in the first quarter," the source added.
The finance minister and central bank governor usually meet in New Delhi during the days before a policy review at the RBI in Mumbai.
The sources said that Jaitley is likely to have that meeting with Rajan on Monday in New Delhi, unless the two meet while the minister is in Mumbai over the weekend.
Jaitley will be travelling to Mumbai on Saturday for two industry events and is scheduled to return the next day.
"The customary meeting between the RBI governor and the finance minister ahead of the policy review could happen on Monday, unless there is a meeting in Mumbai," said the second official, adding that no date had been fixed yet.
Both officials declined to be named because of the sensitivity of the issue.
Separately, the finance ministry plans to extend factory gate duty concessions for car makers beyond Dec. 31, as the industry continues to struggle with sluggish demand due to high interest rates, the first source said.
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