The Hindu Business Line : Isaac urges Centre to hike public spending

Thiruvananthapuram, Nov. 19 The Centre should take a bold decision to increase public spending by around Rs 1 lakh crore over the next couple of years, the Kerala Minister for Finance, Dr Thomas Isaac, said here on Wednesday.

Addressing a seminar on ‘Global financial crisis and its repercussions on Indian economy’, the Finance Minister said the present financial crisis should be turned into an opportunity to invest heavily for developing the country’s much-needed infrastructure. The money pumped into the system would sustain demand to absorb production.

Dr Isaac said the Government had an important role to play in a situation like this when the economy required stimulants to sustain demand and growth. The working sections of the society would find less money to spend on consumption, while the capitalists, with lower expectations, would not make any investments.

The Minister questioned the logic of the Union Finance Minister, Mr P. Chidambaram, in asking the corporate sector to ‘cut prices and not production to tackle the demand slowdown’ in the wake of the global economic crisis.

He said the industries, which operated in a capitalist order of things, would not take the suggestion seriously. This was because their decisions were influenced solely by profit considerations. Mr Narayan Ramachandran, Chief Executive Officer and Country Head of Morgan Stanley, said the ongoing economic slowdown was expected to touch its lowest point by the second quarter of the next financial year.

The Indian scenario would start looking up by the fourth quarter of 2009-10, he added.

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