Business Daily from THE HINDU group of publications
Wednesday, Aug 27, 2008
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Business Daily from THE HINDU group of publications Wednesday, Aug 27, 2008 ePaper | Mobile/PDA Version | Audio |
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Economy Money & Banking - Interest Rates Web Extras - Events Govt allays industry’s fears on slowdown 
No slowdown signs: The Finance Minister, Mr P. Chidambaram, and the President, Confederation of Indian Industry, Mr K.V. Kamath, at an interactive session with CEOs of select CII member-companies in the Capital on Tuesday. - Kamal Narang Our Bureau New Delhi, Aug. 26 India Inc has demanded proactive solutions from the Government on its concerns of increase in interest rates and signs of slowdown in consumer demand, with exorbitant interest cost impinging on its future investments. The Finance Minister, Mr P. Chidambaram, however, brought little cheer on the interest rate front during his meeting with select group of chief executives of CII member companies here on Tuesday even as he made it clear that industry’s fears on signs of slowdown in demand were misplaced, sources privy to the meeting said. Strong on schemesMr Chidambaram is understood to have asserted that the Government was pumping money into the economy through its spending on various schemes and that this would take care of the demand issue. The Finance Minister maintained that demand was quite strong and that credit growth was stronger than what the Government and the RBI want it to be, industry sources said. RBI to decide on ratesOn interest rates, Mr Chidambaram conveyed that there was no scope for the Government to look at interest rates and that RBI would do what it wants on this front. The Finance Minister also ruled out cut in taxes, noting that this would result in higher borrowings for the Government and thereby impacting interest rates. Mr Chidambaram expressed confidence that the economy would be on track in the first half of 2009-10 and that inflation would soften by mid-November when the base effect is likely to wear-off. At the meeting, the CII President, Mr K.V. Kamath, said that even though the current pipeline of investments remained intact, fresh investment proposals were being affected by the rising costs of inputs, rising interest costs and signs of slowdown in demand. On the positive side, Mr Kamath said that there was no problem with liquidity and that banks currently have sufficient funds, although the availability of long-term funds remain an issue. The Finance Minister agreed that there could be some holding back on new projects due to high interest rates, but pointed out that credit off-take across sectors continued to be strong. He said that as long as inflation continued to be high, it would be difficult to moderate interest rates. RBI applies the squeeze Overreacting to price rise? ‘Rising interest rate a dampener’ ‘Interest rates hinge on inflation’ More Stories on : Economy | Interest Rates | Events
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