Jalan rules out rate cut

However, in the short-term, interest rate would not be reduced further, he indicated. "The interest rate environment was positive and it is expected to remain so," he said. Allaying fears of any difficulty in the monetary situation, Jalan said the liquidity situation was "comfortable" with the government borrowing programe "doing well".

So far, the central bank has mopped up over Rs 80,000 crore of the budgeted Rs 1,17,000 crore borrowing for 2000-01. Jalan also said the foreign currency assets (FCA), which declined by $2.46 billion in the first six months, has "increased after the India Millennium Deposit (IMD) inflows".

State Bank of India’s IMD scheme, which helped in garnering $5.5 billion has pushed up forex reserves over $39 billion. During the first six months of 2000-01, RBI made gross purchases of $12.6 billion as against gross sales of $15.3 billion. The net sales amounted to $2.74 billion during April-September, the period which witnessed maximum volatility in the rupee against the dollar.

Speaking about globalisation, Jalan said it was rational to agree that it was a powerful global reality. "We have to see how we can maximise the gains," he said. He said the total capital flow worldwide last year was close to $1 trillion of which India could attract only $3-4 billion. Even portfolio investment from foreign institutional investors have been only $7-8 billion so far, he said.