Scope for further cut in interest rates: Indian PM

New Delhi, Mar 28 (PTI) With inflation touching near zero
level, Indian Prime Minister Manmohan Singh Saturday said
there is scope for further cuts in interest rates and assured
the industry that credit needs would be met to enable the
economy tackle the global financial crisis.

"With ample liquidity and low inflation, there is scope
perhaps for a further moderation in interest rates. Domestic
credit flow for productive needs has to be definitely
maintained at reasonable cost," Singh said in his meeting with
industry leaders here before his departure for the G-20 meet
in London next week.

RBI governor D Subbarao, who was also present in the
meeting, had almost disappointed the industry at the
Confederation of Indian Industry (CII) Annual Session on
Thursday when he stated that further stimulus package would
have a cost in the form of more borrowing requirements of the
government.

Taking stock of the economy post stimulus packages, the
Prime Minister said: "There are signs of improvement in
sectors like steel and cement...The rural demands for goods
and services appears quite robust and the outlook in the
agriculture sector gives room for optimism."

He said public sector banks disbursed more credit in the
current fiscal than in 2007-08 but the lending by private
sector and foreign banks was reduced to one-third to
one-fourth of that a year ago.

The Prime Minister said that while India is "decidedly
better placed" than most countries in the world, there is
uncertainty on developments abroad.

"To tackle a regime of low inflation and demand
uncertainties across some sectors of the real economy, to
ensure that the financial sector remains healthy and
supportive, to husband foreign exchange reserve responsibly,
to sustain a high level of expenditure bearing in mind the
need for fiscal discipline.. are challenges that we confront,"
Singh said.

Commenting on the impact of downturn on employment, he
said: "We must meet the challenge of job losses caused by the
slowdown."

The Prime Minister also sought views of the corporate
honchos on India's stand at the G-20 Summit on April 2, where
the 20 most influential developed and developing countries
would put their minds together to find a way out of the global
crisis.

The Prime Minister said the world looks at India "with
respect and hope: respect for our calibrated reforms which has
resulted in growth with justice and hope that India would be
an engine of growth for the world economy".
The corporate heads said India must express its strong
opposition to global protectionism. The issue of dumping by
China into the Indian markets was also raised at the meeting.

India, Brazil and China have been seeking more say in the
new global financial system post-crisis.

Planning Commission Deputy Chairman Montek Singh
Ahluwalia and Cabinet Secretary K M Chandrasekhar also
attended the meeting.

Tata group chief Ratan Tata, Aditya Birla group Chairman
Kumar Mangalam Birla, ICICI Bank Managing Director and CEO K V
Kamath, Essar Group's Shashi Ruia and Assocham President
Sajjan Jindal were among those present.

Other prominent businessmen present in the interaction
included R P Goenka of the Goenka group, Adi Godrej of the
Godrej group, Sunil Kant Munjal of Hero group, Baba Kalyani of
Bharat Forge and CII Chief Mentor Tarun Das.

CII President Venu Srinivasan said while certain sectors
of the economy were starting to show some signs of recovery,
areas like manufacturing and small and medium enterprises
"were in great pain".

Ficci President Harsh Pati Singhania said a lot more
continuous boost and stimulus would be needed to maintain
India's growth. Assocham President Sajjan Jindal said lending
rates by banks should come down to single digit around 7-8 per
cent immediately to kick start the economy. PTI TR
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