Finance Minister P. Chidambaram on Monday asserted that despite the global meltdown, India, unlike many other global economies, would continue to grow at seven to eight per cent this fiscal. It was nowhere near a recession.Inaugurating the Economic Editors’ Conference here, Mr. Chidambaram pointed out that such a level of growth, even as the global financial crisis had become worse, would be the second fastest growth rate globally. “I wish to emphasise that India is nowhere near a recession. The growth estimated for the first quarter of 2008-09 is 7.9 per cent and the second quarter will, undoubtedly, show high positive growth. Therefore, we must banish the thought of recession,” he said, urging the media not to use the word ‘recession’ while describing the Indian economy.
Mr. Chidambaram admitted that the global scenario was still grim, but there was a silver lining for India as the situation would provide it an opportunity to review and revisit pending reforms. “As and when required, we must introduce measures, particularly in the financial sector, to make our economy more competitive and the economic regulatory and oversight system more efficient, quick and responsive to global developments,” he said. Besides, with the inflation rate dropping to single digit, interest rates could come down further. This would spur demand and induce growth. “If the rate of inflation continues to decline, policy rates may also moderate and the bias in favour of growth may deepen … the RBI’s policy is now biased towards stimulating growth,” Mr. Chidambaram said.
To questions on interest rates, Mr. Chidambaram said many public sector banks had already reduced the rates for home loans by 75 basis points. However, “I cannot give any advice to private sector banks.”