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The Finance Minister has rightly stressed on the need to maintain interest rate on home loans at current levels. Low and affordable rates have prompted a large number of people to go in for home loans. As a result, the housing exposure of banks has grown 111 per cent from Rs 53,737crore to Rs 1,13,230 crore between March 2004 and September 2006. High recovery has also helped increase banks' performing assets.

There has been a substantial increase in housing stock in the economy. Industries such as iron and steel, cement and paint have benefited as a result. Of every rupee spent on housing about 75 paise contributes directly to GDP. The current growth momentum must be maintained. Banks must take Mr Chidambaram's advice of keeping the interest rates low.

Keshava Ammannaya

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