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Newsletter Issue 22 : Feb 1, 2009- Feb 28, 2009

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No recession only slowdown: Chidambaram

 

Source: 24th Jan 2009, Express Buzz  

 

Home Minister, P Chidambaram said that Indian economy is not facing recession but a is experiencing a slowdown, which is more pronounced in the manufacturing sector, and called for more stimulus packages to ensure that aggregate demand remains high.

The country was not facing a recession and was only experiencing a slowdown, Chidambaram said, speaking at the launch of the IFC-Venture East-BYST-sponsored fund to promote grassroots entrepreneurship in India.

He said the word recession was being used "loosely" in India.

"India is facing a slowdown, with the manufacturing sector facing a sharper slowdown. It is important that we take counter and corrective measures to ensure that demand remains very high. While the government has taken a number of fiscal measures and the RBI monetary measures, perhaps more measures are necessary," he said.

Chidambaram, who was till recently the country's finance minister, said the Indian economy suffered a "monetary shock" following which overseas and non-banking credit had "virtually" dried up in the country.

"The entire burden of providing credit has fallen on the banks, and within the banking system a large proportion has fallen on public sector banks," he said.

"Thanks to our policies, our public sector banks are strong, very sound and continue to lend," he said, adding, lending must be increased to stimulate the domestic demand.

"I hope that the Reserve Bank of India and the government can and will work together to ensure there is fiscal stimulus and a supported monetary policy to ensure aggregate demand does not fall too much," he said.