India nowhere close to recession: Chidambaram
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New Delhi Union Finance Minister P Chidambaram on Monday said that India was nowhere close to recession and was poised to record a healthy economic growth compared to other nations. Addressing a press conference, he however admitted that the growth would be moderate in the current fiscal year and asked people to be prepared for temporary economic slowdown.
Commenting on the global economic crisis the minister said, “We must banish the fear of recession for Indian economy as we have weathered the global financial crisis. Global recession’s impact on economy has been muted as economic growth in India has been driven by domestic demand.”
While speaking on the effects of the global financial crisis on the Indian economy, Chidambaram admitted, “People should be ready for temporary effect of the global economic slowdown. The growth outlook remains quite robust yet this year it would be moderate at 7.9 percent. The foreign exchange reserve and foreign investment have been affected by it.”
Accepting the liquidity crunch in the economy, Chidambaram stressed, “Liquidity has been tightened in the market. RBI has infused money into the market to meet the liquidity demands.”
Asking people to repose their faith in the Indian economy, the Finance Minister commented, “Indian economy has been resilient to foreign shocks.”
Talking about inflation, Chidambaram hoped that the worst is over. He said that RBI has taken measures like slashing interest rates and repo rate to curb inflation. As a result, inflation has come down from double digit figure to a single digit figure and commodity prices have started to ease since August, he added.
"If the rate of inflation continues to decline, policy rates may also moderate and the bias in favour of growth may deepen... RBI's policy is now biased towards stimulating growth," he said.
Replying questions on interest rates, the finance minister said many public sector banks had already reduced their home loan rates by 75 basis points. However when probed further as to why private sector lenders are not responding, he said, "I cannot give any advice to private sector banks."
Defending the economic measures taken in the UPA government’s tenure, Chidambaram said, “Economy has improved since UPA came to power. We have sustained 9 percent growth for 3 years. Income, savings and exports have also been on the higher side.”
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