The Hindu Business Line : Inflation check

The editorial "Slipping confidence" (Business Line, May 8) vividly brought out the efforts of the RBI and the Government to tackle inflation. The survey, conducted by National Council Of Applied Economic Research, revealed that the Business Confidence Index has declined by 4 percentage points. This is a matter of concern.

If the necessary steps not are taken soon to generate all-round enthusiasm and high business confidence, maintaining GDP growth at 9 per cent and above may not be possible. There are signs of pessimism slowly creeping in and this must be checked.

A positive economic climate is vital for generating business confidence and attracting private investments. The Government and the central bank must create such an atmosphere by encouraging investments and undertaking business promotion efforts.

While the RBI has asked banks not to increase lending rates too much, whether all banks will heed this advice remains to be seen. It is common knowledge that cheap productive credit is vital for the economy's expansion. This is an area where the RBI has to play a decisive role.

The Union Government and the States must also play their respective parts well. They must focus on development of infrastructure and social sectors and reduce all wasteful expenses. Spending for populist programmes and schemes, such as loan-waivers and write-offs, must be avoided.

K. K. Ammannaya

Udupi

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