Bangalore, Aug 1: Union Finance Minister P Chidambaram today said the Indian economy would get out of the 'trough of uncertanity,' caused by high inflation and the resultant higher interest rates in six months to one year.
Speaking after inaugurating the 1,000th branch of the Corporation Bank here, he said the high cost of credit, which has threatened a economic slowdown, will be temporary and banks should help mitigate this problem faced by the people. In what could be a bitter pill to the public sector banks, which have suffered a drastic fall in their net profits during the first quarter of this fiscal for different reasons, he asked them to bring down the cost of credit to ease the burden of high interest rates.
''The problem of higher interest rates will not stay for long and it will come down in six months to one year. My message to public and private sector banks is that they should bring down the cost of credit to help the customers mitigate this problem,'' he said.
The Finance Minister said the surest way of achieving this would be that the banks employ 'low cost ways' to improve their business.
''Rising aspiration shows there is enough money in the system, both in rural and urban areas. People in the rural areas nowadays ask me not to sanction roads or bridges but bank branches. If there is a branch, they ask why there is no ATM booth. We should bring this wealth into banking system,'' he said.
A sure way to do this was to bring the millions of people who did not have bank accounts. The banks should aim steadfastly to increase the number of Current Account/Savings Accounts (CASA) to at least 40 per cent in the shortest time.
''In Coporation Bank this is at 34 to 35 per cent. CASA must be mobilised in a big way,'' he said.
Mr Chidambaram said the country was facing 'difficult days' due to spurt in the prices of crude oil and commodity prices. This had threatened the economic growth of the country which had witnessed a healthy GDP growth during the last four years. He said inclusive growth, which had become the watchword of the government, should not be used by anyone as a political or election slogan.
''Economic growth should not be limited to cream of the society.
Inclusive growth is the sure way to take the country and its economy forward,'' he said.
He regretted that despite several reforms initiated by the government, millions of farmers still remained outside the banking system.
''The farmers are left to raise their own money. Imagine if they decide to stop producing food due to difficulties they are facing to raise credit. This is the reason why I say institutional credit is the best way we achieve inclusive growth,'' he said.
He said the UPA Government had increased the farm credit from Rs 86,000 crore when it took to power in 2004 to Rs 2,50,000 crore during the last fiscal.
''We have pegged the target at Rs 2,80,000 crore for the current year but I am confident that with the help of the banks we can reach the figure of Rs 3,00,000 crore,'' he said.
He said for him banks were the heart of the economy while the Finance Ministers were often called 'heartless'.
Health of the banking sector was important and he would continue focussing the sector, he said.
Mr Chidambaram said loans to pursue higher education to all needy students had remained his other mantra.
''Human resources will be one of the greatest challenges that the country will face in the coming 15 to 20 years. Hence, no eligible child should be denied to pursue higher education,'' he added.