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Mr P. Chidambaram, Finance Minister

Our Bureau

New Delhi, Oct. 21 Amid concerns of a slowdown in the global economy in the wake of the worst financial turmoil, the Union Finance Minister, Mr P. Chidambaram, on Tuesday told the Lok Sabha that the Government would look to further stimulate the economy even while paying attention to inflation.

“We are in a situation where our banking system is stable. We must stimulate the economy. This is the right time. The recent measures of cuts in the cash reserve ratio (CRR) and repo rate were also intended to stimulate the economy”, Mr Chidambaram said while replying to the debate in the Lower House on the first batch of supplementary demand for grants for 2008-09.

The Lok Sabha later authorised the gross additional spend of Rs 2,37,285.84 crore, including a cash outgo of Rs 1,05,613.38 crore.

Mr Chidambaram conceded that inflation was high but noted that high global oil prices were an important factor behind the rise in inflation. Although global crude oil prices had moderated in recent weeks, Mr Chidambaram ruled out any immediate cut in petroleum product prices in India.

“Our current prices (of petroleum products) are calibrated to $ 67 a barrel. The current price is $ 70 a barrel. Even today there is under recovery in petrol, diesel and gas prices. We have not reached a point where under recovery is wiped out. This is not an appropriate time for us to reduce prices”, Mr Chidambaram said.

The Finance Minister, however, noted that the moderation in international oil and commodity prices would have a beneficial impact on inflation in the coming weeks.

Referring to the BJP criticism that it had inherited a bad economy from Mr Chidambaram in 1998 and that he had inherited a sound economy from the NDA in 2004, Mr Chidambaram said that “while they had inherited a bad economy from me (from the UF Government) and I had inherited a good economy from them, they will not come to power to inherit the economy from me and we will continue to run the economy”.

The Finance Minister made light of the BJP criticism about UPA’s industrial performance by stating that while the highest industrial production growth rate during the six years of NDA rule was 7 per cent achieved in 2003-04, the lowest industrial growth of the UPA Government so far was 8.1 per cent in 2007-08.

Mr Chidambaram also ruled out further changes to the agri-debt waiver scheme.

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