Govt Firm On Lowering Rates: Fm

This, he said, was the immediate concern of the government in the forthcoming busy season credit policy.

"Both the RBI governor and I have indicated that we should try to nudge the banks to lower interest rates. The reason why real interest rates are high is because inflation sharply decelerated...while bank rates did not come down correspondingly. We must ensure that inflationary expectations are dampened. That alone will encourage the banks to bring down nominal interest rates," he said.

The minister, who was here to meet top brass of the British industry en route to the US, said the government would also have to look at some sectors, including exports, which may require some more concessional credit. "Export growth this year is slightly lower than last year," he noted.

 

Asked if this worried him, Chidambaram said, "I'm not very worried...The past three years export growth has been very high, so you can't have 20 per cent growth every year. It is still 14 per cent and it is likely that it may pick up in the remaining six months."

He said he had met officials of major companies, including National Grid, National Power, Rolls-Royce Power, Alcatel, France Telecom and Swiss Telecom, where some "problems" in areas such as investment in power and telecom emerged. For example, in telecom there were serious problems about the meaning of 49 per cent foreign equity, or the relationship with the department of telecommunications. "Should licence fees be deemed to be capital or revenue expenditure? Whether holding companies will be allowed to enter the field? There were a number of questions, he said.

Similarly, he said, there were aual="/incs/bottom.inc"-->