New Delhi, February 2
Cautious of the fact that downturn in the global economy may trip India’s growth, the government is focusing on boosting demand.
On the agenda of the government is further easing monetary supplies by making credit available at cheap rates for commercial and domestic borrowers. For this purpose, Finance Minister Pranab Mukherjee, along with Deputy Governor of Reserve Bank of India, met chief executives of the public sector banks here today.
The talks included easing credit to rural and labour-intensive sectors involved in small and medium industries. “In view of contracting global demand, we have to focus on domestic demand by primarily stimulating demand in the rural areas and highly labour-intensive sectors,” Pranab Mukherjee said.
The sectors that were specifically discussed for easing the credit during the meeting were infrastructure, rural credit, consumer credit and MSMEs, among others.
“We must support the development of those sections which immediately boost growth and throw up employment opportunities,” Mukherjee said.
On the part of the banks, there is an assurance to the government that they would reduce rates and make credit easily available . The banks have been holding the money close to their chest as they fear that lending in these uncertain times would mean a lot of bad debt on a later date.
“There is general expectation that interest rates will come down, as the deposit rates have also come down drastically,” said Finance Secretary Arun Ramanathan.
Country’s largest lender, State Bank of India said there was no discussion on cutting rates, and instead there was an extensive review. However, each bank would take its own view to cut rates, said O P Bhatt, chairman, SBI. PNB chairman K C Chakrabarty said, “There is definitely a scope for rollback of lending rates by at least two basis points as the inflation rate is also coming down”.
