New Delhi, Nov.18 : Union Finance Minister P. Chidambaram today said that steps to counteract the present economic slowdown will include ensuring adequate liquidity, price reductions by industry and efficient credit delivery mechanism.
Addressing the session on "Risks to India's Economy in a Post - Crisis World" at the 24th India Economic Summit jointly organized by Confederation of Indian Industry and World Economic Forum here, Chidambaram showed great optimism about the prospect for growth in India.
He said that although India is experiencing the spillover effects of the sub-prime crisis, it is relatively better positioned to whether the crisis. According to him, India's agricultural sector continues to grow at a robust pace and will provide a cushion to the Indian economy amidst the current uncertain situation.
While pointing out that capital inflows and external trade will potentially get affected, he emphasized that the problem is not insurmountable and that stimulating domestic demand and liquidity will help India make a speedy recovery.
According to him, the current fiscal year is a year of consolidation and 2009-10 will see India returning back to a normal growth trajectory.
He said that the Government's policy bias is in favour of stimulating growth as against inflation targeting and reassured that the Government is being extremely vigilant and will act in a proactive way to take the necessary steps.
He urged India Inc to exhibit confidence and courage while dealing with the ongoing slowdown in the economy.
Speaking about G 20, he said that G20 is here to stay as the single most important forum to address economic and financial issues. However, he felt that the representation of Western nations is still too high.
Chidambaram also called for a global oversight mechanism to ensure the implementation of the plans discussed during the G20 meeting.
Giving the industry perspective, K.V. Kamath, Managing Director and Chief Executive Officer, ICICI Bank and President, Confederation of Indian Industry, India, said that further interest rates cut by 200-300 bps will help improve the liquidity situation in the economy.
He pointed out that although access to credit is a constraint at the moment, investment plans for most companies for the existing pipeline of projects are still intact. According to him, infrastructure is a major challenge confronting India and the need of the hour is to strategize the way in which the country can again move to a higher growth trajectory.
The current crisis situation is an appropriate opportunity for Indian policy makers to speed up pending economic reforms, said Kamath. He showed confidence that India Inc will emerge from the existing difficult times as much stronger and become truly global competitors.
Speaking about the deficiencies of U.S. regulators that triggered the crisis, Richard C. Levin, President, Yale University, USA, said that Indian regulators are doing a great job and India will be one of the economies to come out of this situation early. Mr. Alan G. Friedman, Executive Editor and Anchor, FBC Group, United Kingdom, who moderated the session, said that although India is not decoupled from the effects of the crisis, it will soon come out of it and assume a much stronger position in a post crisis world.