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India RBI says budget steps to help liquidity

NEW DELHI: The Reserve Bank of India (RBI) said on Saturday that the abolition of interest tax and other proposals announced in the 2000/2001 (April-March) budget should enable the overall liquidity situation to remain comfortable and the cost of credit reasonable. "The abolition of tax on interest rates should also provide the necessary environment for keeping the overall liquidity situation comfortable and the cost of credit reasonable," a RBI statement quoted central bank governor Bimal Jalan as saying.

The statement was released after a three-hour customary post budget meeting of the RBI's board of directors and the finance minister in New Delhi.

The governor said the post-budget meeting was taking place against the background of "very healthy and welcome developments in the economy in the current year."

"Against this background of developments in the current year, the governor hoped that the measures taken in the 2000/2001 budget would further support accelerated growth combined with price stability," the statement said. -Reuters