PM asks RBI to keep close vigil on liqudity situation

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New Delhi, Nov 18 (UNI) Expressing satisfaction with the steps taken to enhance liquidity, Prime Minister Manmohan Singh has asked RBI Governor to keep a close vigil on the situation and act swiftly.

The directive came from the Prime Minister at the meeting of the Apex Group, set up by the Premier and headed by him. The Group was set up in the wake of the global financial crisis and would work out a response to minimise its impact on the Indian economy.

The Group includes Finance Minister P Chidambaram, Commerce Minister Kamal Nath and RBI Governor D Subbrao.

Top officials of the Commerce and Finance Ministries were present at the meeting.

Briefing newspersons on the first meeting of the Apex Group, Mr Chidambaram said a review of the liquidty situation and crerdit delivery was made by the group.

A review was also made of the RBI window set up recently to finance NBFCs, mutual funds and small and medium industries.

"It was a comprehensive review", Mr Chidambaram said.

Mr Chidambaram said a separate meeting would be held of the Group to examine the gamut of isues relating to exports.

He said Planing Commission Deputy Chairman Montek Singh Ahluwalia made a presentation for enhancing public expenditure on the infrastructure sector, including Infrastructure Leasing and Financial Services Limited(IILFS). The Commission wants enhanced funding for IILFS.

Mr Chidambara said the larger question, the fiscal stimulus was looked at.

He said the Prime Minister said the additional spending of Rs 1,05,000 crore provided in the Supplementary demands for Grants over and above Rs 6,00,000 crores to Rs 6,50,000 crore in the Budget meant that the fiscal stimulus was already operational.

He said the Ministries have been asked to spend the Budgeted amount by March 31, 2009 and if they need more money, the government would be willing to look at it.

Asked what are the sectors that are seeking succour, Mr Chidambaram said apart from the Mutual Funds and NBFCs, the other sectors include real estate and textiles.

Sources say the government is expected to provide a policy response to prop up exports.

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