Chidambaram calls for more measures to beat slowdown

CHENNAI: Union Home Minister P Chidambaram on Saturday called for more measures from the government and RBI to boost consumer demand in the economy.

Mr Chidambaram, who, till a few months back, held the Finance ministerial portfolio, said there was a case for additional fiscal and monetary measures to beat the slow down in India.

He was speaking at the launch of "BYST (Bharatiya Yuva Shakti) growth fund", jointly instituted by the IFC and private equity fund VentureEast, to mentor and finance individuals, whose entrepreneurial aspirations is constrained by limited resources. The growth fund is committing $2.5 million and hopes to reach $5 million in two years.

Mr Chidambaram called for more efforts from government and private institutions, to fund entrepreneurship at the grass root level. He said that 40% of India's exports came from the micro, small and medium enterprises (MSME's) and it was important to nurture this sector, which was the largest job creator in the country.

About the state of the Indian economy, Mr Chidambaram said, "The term 'recession' is being loosely used in India. India is facing a slowdown and the manufacturing sector is facing a sharper slowdown. So it is important that we take counter cyclical measures, corrective measures to ensure that demand remains very high."

Mr Chidambaram added that while a number of stimulus measures are underway, additional measures are needed to get the economy back on the growth track. "Perhaps more measures are necessary. There is a monetary shock...overseas credit has dried up, non banking credit has almost dried up, the entire burden of providing credit has fallen on the banks, especially on the public sector banks, which are fundamentally strong and continue to lend," he said.

He further said the onus was on the government and the Reserve Bank of India to ensure that the demand doesn't continue to slide. "Lending must be increased to stimulate demand in the domestic economy. I hope the RBI and the government can and will work together to ensure that there is a fiscal stimulus and supportive monetary policy to ensure that aggregate demand does not fall too much and ensure it rises," he said.