RBI to Go for Rate Cut This Month: Uday Kotak

New Delhi: The government has stuck to its fiscal consolidation path and this is very positive for the interest rates scenario, eminent banker Uday Kotak said, adding that the Reserve Bank of India was expected to go for a rate cut as early as this month.

In the Budget 2016-17, the government has stuck to the pre-announced fiscal deficit target of 3.5 per cent of GDP.

"This is very commendable and positive for the interest rates in the economy. As a follow through of this, I expect the Reserve Bank of India to consider dropping of interest rates and repo rates sometime in March," Mr Uday Kotak said in his post budget reaction.

"This Budget is clearly pro-farmer, pro-rural India and at the same time, not hurting the markets," he said, adding that it will give a "big boost for sustainable growth of Indian financial savings".

Meanwhile, global headwinds continue to be quite a bit, he said, adding, "The Budget being out of the way, we are really now having to face the challenges of what happens in the rest of the world."

Regarding the government's proposal to increase surcharge on income of the super-rich to 15 per cent, Mr Kotak said that such people should contribute towards fixing the country's fiscal woes.

"The higher income Indians, will have to pay more taxes, including on dividends, but that as an Indian I believe, that Indians must contribute to fixing India's fiscal house, once and for all," he said.

The government in the Budget for financial year 2016-17 increased the surcharge on the super-rich having an annual income of over Rs 1 crore by 3 per cent to 15 per cent.

"I feel positive, about this Budget and if I have to take a long term view, this is a very important step in the right direction," he said.

He further said there is an expectation that there will also be settlements on tax cases, of International companies with the Indian government coming out of retrospective taxation.

"So some of these, I think will help increase the credibility of India and putting India on a sustainable path," he added.