|
| FinMin has done good job in Govt borrowing: Kochhar |
| Press Trust of India / New Delhi Aug 24, 2009, 15:16 IST |
|
Finance Minister Pranab Mukherjee holds a couple of Master of Arts degrees, but banker Chanda Kochhar rates him as a great financial engineer for designing the government's borrowings taking care not to hurt the credit needs of the industry.
"I am complimenting the way in which one is managing finances, given the constraint that we are in", said Kochhar, ICICI Bank CEO and Managing Director, when asked if Mukherjee, a seasoned politician who holds masters in history and political science, deserves praise for his financial wizardry.
When the government announced plans to borrow Rs 4.5 lakh crore from the market this fiscal, up from Rs 3.1 lakh crore last fiscal, the industry started worrying that its credit needs would not be met.
"When the number (quantum of government borrowing) came out, all of us were worried. We needed more clarity on how it will be managed. Very soon clarity came," she said, pointing out that as much as 70 per cent of the government borrowing will be completed during the first half, leaving credit for the industry in the second half.
The government had stepped up borrowing in order to provide stimulus to the economy by increasing public spending.
Admitting that the government borrowing was indeed large and could have impact on financial system and interest rates, Kochhar said, "There was a lot of thought behind it. Almost 70 per cent would be completed in the first half.
"It only meant that you are trying to finish the burden of government borrowing in the period when the credit growth will be small so that in the second half when the credit growth picks up, you are not leaving the burden of government borrowing on the financial system", Kochhar said.
Besides, she said, the government has also given a strong message to the money market by announcing that it would not step up the borrowing limit even if there is a shortfall.
"The very important message that the government gave out was that even if there is some shortfall we will not increase government borrowing. We expect that we will make it up out of tax revenues," she said.
"So we are (also) not allowing the impact of monsoon to really burden the financial system in that sense because more government borrowings could have meant other impact (upward pressure on interest rate)," she added.
Optimistic of a 6.5-7.5 per cent growth rate this year, Kochhar said, "I would only say that it is important now to start the government spending in a big way. As that starts, we would start seeing the impact of multiplier on the economy."
Lauding the efforts of the government in tackling the present drought condition, Kochhar said, "I must say two or three things that the government is doing, I must compliment the government.
Food grains stocks are very comfortable, even compared to the regular buffer stocks, stocks of wheat and paddy are very comfortable."
Even if paddy production suffers, there is enough in stock for consumption, which would allow states to shift to pulses cultivation, she said, adding that the actual production may not come down."
If production remains the same, then one would not see much impact on the GDP, she added.
For the final impact, she said one would have to watch what happens to rural consumption.
Acknowledging that the rural economy is the mainstay for India, Kochhar said, "I would only say that it's a little premature to arrive at a judgement that it is indeed going to impact rural consumption in a big way."
"So I am an optimist... I will wait for some more time...Last two three days, some states have done some catching up as far as monsoon is concerned," she said.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
Content Guide
