He said that layoffs can be avoided if correct rational decisions and cut in prices are done. The industry, he said, would not need to lay off workers if it takes the "correct rational decisions and cuts prices".
When pointed out that noted industrialist and Bajaj Auto Chairman Rahul Bajaj had said that it was not possible to cut prices, Chidambaram said, "Rahul Bajaj can be persuaded to change his views."
A classic response to a demand slowdown is to cut prices, he said, adding, "what is the option? The alternative is to allow inventories to build up, cut back production; layoffs and retrenchment, which hurt your loyal workers, losing market share, allow your account to become an NPA with a bank. That to me is a no go option".
A much better option, he said "is to cut prices, take a hit on your bottom line, if necessary, take a hit on your profits, but at least keep your market share, keep your production lines, keep your product in the market, keep your loyal workers".
Pointing out that prices of inputs like fuel, steel, coal and shipping, among others, have come down substantially, Chidambaram said "you (industry) must take a rational call and cut prices for the medium term. Hotels must cut tariffs, car manufacturers must cut prices, scooter manufacturers must cut their prices, airlines must cut their rates."
Global credit crunch
Replying to questions on the global credit crunch, the minister said the problem would be fixed by the first week of December.
"We have done a good balancing act so far, interest rates have come down and there is adequate liquidity. I would first like the RBI governor to address the issue of ample liquidity," Chidambaram said.
On the possibility of a cut in prices of petroleum products following a dip in crude prices in the international market, he said, "This is certainly not my subject. It is the Petroleum Minister's subject. And this is a decision, which the Prime Minister will take after looking at numbers. My job is to provide the numbers, to support the argument one way or the other."
When asked whether the crisis was giving him sleepless nights, he said, "None at all. I think I have released 2 or 3 books in this period and I have read every book and watched you guys on television and there is no sleepless night and I think what we are doing is the right thing.
"If I were the Secretary Treasury in the US, then I would have had sleepless nights, but being Finance Minister of India this time does not require me to lose sleep," the minister said.
India, he added, would "return at decent satisfactory rate of growth and the next year we are looking to bounce back to high growth path."