RBI rate pause will spur growth: Pranab

The Reserve Bank of India'sdecision to keep key rates unchanged will help improve business sentiments andregain economic growth momentum, Finance Minister Pranab Mukherjee said on Friday.

"I am hopeful today's announcement will help inregaining our growth momentum with improved macro economic parameters in theremaining period of fiscal 2011-12," Mukherjee told reporters here whilereacting on the RBI's mid-quarter review of monetary policy in which it keptkey policy rates unchanged.

Welcoming the central bank's move, Mukherjee said the RBIhas chosen to address the concerns on slowing growth.

"The RBI has changed its policy stand from the monetarytightening. There is no change in any policy variables and that includes therepo rate... Governor has chosen to reflect his concern on growth which hasaltered in the past few months," the finance minister said.

In its mid-quarter review of the monetary policy, thecentral bank kept key rates unchanged Friday after 13 successive hikes sinceearly 2010.

The review came against the backdrop of India's annualrate of inflation falling to 9.1 per cent in November, while the food inflationfell to 4.35 per cent for the week ended Dec 3.

But factory output declined 5.1 per cent in October, whilethe gross domestic product saw a mere 6.9 per cent growth during the secondquarter of this fiscal, which was the lowest in over two years.

The Indian economy grew by 8.5 per cent in 2010-11 and thegovernment had set a target of around 9 per cent growth for the currentfinancial year.

The finance minister said the recent moderation in inflationand growth had necessitated change in monetary tightening stance.

"There has been an appreciable decline in foodinflation in the month of November but inflation in manufactured products isstill high," Mukherjee said.

"The need to improve the business sentiments andrecover the growth momentum in the remaining months of the current fiscalnecessitated a review of the current monetary policy stance," he said.

The Reserve Bank said it maintained its projection forannual inflation at 7 per cent for end-March, while reserving its forecast ongrowth for the third quarter review, which is expected in January.