Budget 2012: Drop in core inflation makes case for int rate cut:Gopalan

There is a strong case for lowering interest rates in India following a significant drop in the core inflation, R. Gopalan, secretary of economic affairs in the ministry of finance, said on Friday.

Non-food manufactured inflation, which the Reserve Bank of India uses to gauge demand-driven price pressures, slowed to a 14-month low of 5.8% from 6.7% in January.

The RBI, which has raised rates 13 times since March 2010, and has now signalled policy easing, kept rates unchanged in its policy review on Thursday.

In his budget speech on Friday, Finance Minister Pranab Mukherjee said the government plans to keep 2012-13 subsidies under 2% of GDP, and under 1.7% of GDP in the next three years.