India finance minister wants caps on foreign investment relaxed

NEW DELHI (REUTERS) - India's Finance Minister P. Chidambaram advocated the removal or relaxation of "outdated"caps on foreign direct investment (FDI) in different sectors, as his government struggles to revive an economy that has posted its weakest growth in a decade.

Chidambaram also said in remarks to Bloomberg TV India on Monday that there was a case for the Reserve Bank of India (RBI) to cut interest rates, a day before the central bank was due to announce its monetary policy decision.

The spotlight will fall on the RBI's monetary policy review on Tuesday, when the central bank is expected to cut policy rates by a quarter percentage point, according to a Reuters poll.

In January, the central bank made its first quarter point cut in nine months as inflationary pressures eased and the central bank placed more priority on halting the loss of momentum in the economy.

"We have argued on the government side that there is a case for lowering policy rates," Chidambaram said, adding that the decision was ultimately up to the central bank governor.

"I think the RBI should take a comfort from what we have announced as the fiscal consolidation path, and I am sure the monetary policy advisory committee will advise the governor appropriately," he said.