FM, tycoons meet to find ways to strengthen economy

Finance Minister Pranab Mukherjee will meet leaders of Indian industry, including Ratan Tata, Mukesh Ambani, Anil Ambani and Sunil Bharti Mittal, on Monday as the government tries to tackle a sluggish economy amid spiralling inflation and high interest rates.

Other top industry leaders, Kumar Mangalam Birla, Y C Deveshwar and Narayana Murthy and Anand Mahindra have also been invited to the meeting to discuss ways to rejuvenate the economy, Finance Ministry sources said.

"The Finance Minister will discuss steps to boost industrial output and promote economic growth and has invited chiefs of country's 17 top corporates," they said.

The industry, which is reeling under a high interest regime for quite sometime now, is likely to point out their trouble areas as rising inflation is making credit costly.

To tame inflation, which has remained close to double digit mark through April-June quarter, the Reserve Bank has hiked interest rates three times so far this fiscal.

Industry is of the view that rising interest rates is increasing the input cost as loans are getting costlier.

In an interview to PTI, Mukherjee admitted that high interest regime being followed by the Reserve Bank "to some extent may effect (the GDP growth)..."

The impact of slowing credit is also visible in industrial output growth rate, which dipped to a nine-month low of 5.6% in May due to poor show of manufacturing and mining sectors and lower off take of capital goods.

The central bank has raised its key policy rates 11 times since March 2010 to check inflation which is above 9%.