Economic revival

— Prime Minister, Manmohan Singh, while addressing some 25 leading industrialists, invited by him to his residence on 28 March, 2009, ahead of his London trip to participate in the G-20 summit, asked them to be sensitive to the adverse impact of current economic crisis on the weaker sections of society and sought their help in meeting the ongoing challenges. Before making his appeal to the industrialists, he heard their views on some of the key issues concerning domestic and global economic crisis. Along with the Prime Minister, the Deputy Chairman of Planning Commission, Montek Singh Ahluwalia, the Reserve Bank of India Governor, D Subbarao and the Cabinet Secretary K M Chandrasekhar who also participated in the meet had carefully noted the main concern of the Indian industries that the major detractor of anti-recession move is the high interest rate regime of the banking system despite inflation receding to near-zero level on the one hand and several installments of cut in RBI’s short term key interest rates along with both the cash resource ratio and the statutory liquidity ratio. While agreeing with the concern, the Prime Minister emphasised that the domestic credit flow for productive needs has definitely to be maintained at any cost. While certainly there is ample scope for further cut in repo and reverse repo rates by Reserve Bank of India, particularly since the rate of growth in wholesale price index has taken a sharp downturn on the one hand and real interest rate, the difference between inflation rate and the nominal interest rate, is still very high on the other, the corporate sector need not be pessimistic of their future prospects of growth in production scale.

Of late, it is happy to note, the six core infrastructure industries, viz, the crude oil, refinery products, electricity, steel, coal and cement which have a combined weightage of 26 per cent on the Index of Industrial Production (IIP) have shown signs of recovery with their IIP growth of 2.2 per cent in February, 2009 as against April-February growth of 3 per cent. The change in production outlook may be seen as a signal indicating economic movement on growth path howsoever small it may be since most of these industries reported negative growth in the previous month. Moreover, the demand originating from rural sector of India, which is crucial for the revival of manufacturing sector will expectedly take a northward turn sooner than later since the outlook in agricultural sector gives room for optimism, besides several lakh crores of rupees being spent by government on schemes of development and loan waivers. It is certainly right that at a crucial time of the kind, as the Federation of Indian Chambers of Commerce and Industry (FICCI) as well as the Associated Chamber of Commerce and Industry (Assocham) empasised, the impending general elections should not come in the way of crucial economic policy decisions relating to economic revival because every passing day is important in this crusade. ASSAM TRIBUNE