The finance ministry has said that there is nothing exceptional in the comments made by the deputy governor of Reserve Bank of India, YV Reddy that interest rate cuts cannot be a panacea for economic recession.

Rakesh Mohan’s comments were in response to the interview with Reddy carried in Business Standard today.

He said a combination of fiscal and monetary policy is needed and which has been emphasised by Reddy.

Dispelling the impression that there is a difference of perception between the finance ministry and RBI on how to cure the current recession, Rakesh Mohan said”the general tenor of what he (Reddy ) said is unexceptional.”

He said there is not too much should be read into the fact that a senior RBI official has opted to discuss about how far interest rates can be useful in kickstarting the economy.

Expenditure Secretary CM Vasudev also agreed with the comments made by Reddy yesterday. He told Business Standard that there is no doubt that interest rate cut alone will not help the economy to grow.

Instead it has to be combined with a surge in public investment in the economy. Rakesh Mohan said the fiscal policy stance for the year has already been fine tuned by the finance minister, with his emphasis on prompt utilisation of allocated expenditure budget by all ministries.