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Low interest rates until recovery signs become more visible: Mukherjee

By SiliconIndia   |   Monday, September 28, 2009
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Mumbai: Finance Minister, Pranab Mukherjee said that low interest rates will be maintained until the signs of global recovery become more prominent. Addressing the annual general meetings of Merchants' Chamber of Commerce (MCC) and the Bengal chamber of Commerce, in Kolkata, he said that the ministry would not introduce a tight monetary policy unless the global economy, especially the U.S. and the European economy shows stronger signs of recovery. Mukherjee indicated that the lower rates gave an easy access to credit to the enterprises, thus helping them recover from this economic crisis. Dr D. Subbarao, Governor of RBI said that the central bank would continue its soft money policy unless the signs of global recovery became more prominent. Mukherjee said that according to a recent International Monetary Fund review, the global recovery was primarily due to Indian and Chinese economies. He further added that he faced a strong pressure, at G-20 Finance Ministers' meet to discontinue providing stimulus. "However, we objected to that and advised our leaders that the G-20 should not consider the issue till the signals of recovery get distinctly strong," he said. The finance minister also said that high fiscal deficit (6.8 percent) was unsustainable and they would have to reduce it to five percent. Expressing concerns over the export sector, he said, "It is unfortunate that Indian export basket is not well diversified and over 60 percent of exports are made to the U.S., Europe and Japan. I am afraid there may not be a significant improvement in our exports until there are strong signals of recovery of these economies." Moreover, the minister was optimistic about the manufacturing sector's performance and said that there was improvement in the Hydel power supply scenario.
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