MUMBAI: A clear mandate to the Narendra Modi-led National Democratic Alliance could pave the way for easier interest rates from the Reserve Bank of India when it announces its second bi-monthly policy for 2019 on June 6th.One of the uncertainties’ over monetary policy was the forthcoming budget’s adherence to fiscal consolidation. Before elections there was a risk of slippage as the NDA’s main rival the - Congress-led United Progressive Alliance -- had under its proposed Nyay scheme promised minimum basic income of Rs 72,000.RBI governor Shaktikanta Das had indicated that he will use all possible instruments to ensure liquidity in the markets. However, on interest rates he has also called for more flexibility in policy making by suggesting that in an unpredictable environment, the central bank should not be a prisoner to its stance and should have the freedom to move rates either way.Das had also said that rate changes need not be in multiples of 25 basis points and the central bank should be able to move rates by even 35 basis points to add nuance to its signal.Syndicate Bank MD & CEO Mrutyunjay Mahapatra said, “RBI’s successive rates has had an impact on lending rates of a limited number of banks. I feel they might wait for the existing cuts to be digested or they could cut rates to signal easier money as short term rates are a bit tight.”Most economists feel that there is a case for the central bank to ease rates given the slowing growth momentum and benign inflation. “Given that our inflation forecasts remain below 4% during this year, growth remains below our estimated potential, and the Fed continues to be dovish, we project space for one more rate cut by the RBI,” said Prachi Mishra, an economist with Goldman Sachs India in a report. It is also a widely held view that RBI would need to do more to ensure that there is a transmission of the earlier rate cuts.According to Suyash Choudhary, head fixed income at IDFC AMC the headroom for government to provide a stimulus is limited and the maximum ‘room’ as it were, resides with monetary policy currently. “CPI has tracked lower than the mid-point of the official target band for a while now.Furthermore, it is likely to remain relatively benign in the foreseeable future as well. Major global central banks have turned dovish on the margin. The local growth narrative is one of a visible slowdown. Various sectors like real estate and telecom remain relatively stressed and income growth remains muted. In short, in the real world it is difficult to worry about demand-side inflation at least in the near term,” Choudhary said.India Ratings in a report said that it expected liquidity in the system to improve as money comes back into banks after the elections.“Ind-Ra believes the sharp volatility in system liquidity is probably one of the main causes of the elevated short-term interest rates. The agency expects the system liquidity to improve considerably and potentially see a surplus between June-August 2019 if the cash comes back to the system due to the general elections drawing to a close and government spending,” the report said.