Projecting 6-7 per cent growth this fiscal, government on Monday ruled out further duty cuts and favoured 'benign' interest rates to ensure that the measures to contain inflation did not hamper growth.
"We are in favour of benign interest rates. Any hike in rates will hit growth that we will not like to have," Finance Secretary D C Gupta told reporters here ahead to RBI's Busy Season Monetary and Credit Policy on October 26.
It was for the RBI to decide on the interest rates, Gupta said, adding, "We have not seen much pressure on rates. In fact credit has shown impressive growth."
On growth prospects, Gupta said: "Looking into the trend of first quarter, GDP growth of 7.4 per cent, we should be satisfied with 6-7 per cent this fiscal."
Gupta's assertion on benign interest rates comes amidst high inflation which is now over seven per cent mainly due to rise in global oil prices, ruling over $52 a barrel.
Asked about the trends in price level, Gupta said: "Inflation has to be watched, but it depends on external factors like hike in oil price."
"There won't be any more duty cuts to check inflation," he said.
Gupta quoted Finance Minister P Chidambaram's statement in Washington that a $5 increase in price per barrel of oil will retard GDP growth by 0.5 per cent. More than that it will also contribute to inflation by about 1.4 per cent.
He parried on whether government proposes to introduce specific duty on petroleum products instead of ad-valorem rates as at present.
The Lahiri Committee has been going into all aspects of duty structure and is expected to submit the report within a month, he said.
This committee has been set up in the wake of surging global oil prices now at over $52 a barrel.
"Everyone is concerned; it is not necessarily a supply constraint. Fuel price hike always has an impact," he said, adding that the petroleum ministry is keeping a close watch on the situation.