Riding economic storm, FM and India Inc differ

ECONOMIC SUMMIT: FM says price cuts is the way out to insulate India from the global recession.

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New Delhi: India is still talking of better growth rate and says it is looking for solutions to a global problem. But Finance Minister used the India Economic Summit to trigger a debate on how to ride the global economic storm

“While world output will decline - and to that extent affect our exports, affect some capital inflows, affect external credits - we must be able to quickly substitute or compensate for that by stimulating domestic demand, “says Finance Minister P Chidambaram

And on spurring domestic demand and on companies luring people like you and me to buy more spend more, here's the Chidambaram Mantra.

“Let me make it very clear. Speaking for public sector banks they have assured me that they are ready and willing to vastly expand loans to home, car buyers, 2 wheeler buyers. But this can only happen take off if prices are cut for flats, apartment, cars and 2 wheeler,” he said.

But the captains of India Inc are not amused. They are calling for more monetary measures from Chidambaram and the finance managers.

“The government has to ensure through monetary measure to facilitate larges supply of housing in the market then only prices will fall,” says Chairman, DLF, KP Singh.

“The question is whether the total market will go up and that somebody has to see and the industry is obviously looking at it. Today for the 2 wheeler industry I do not see a 35% margin,” says Chairman, Bajaj Auto Rahul Bajaj.

There is no gloom and doom yet in India. Chidambaram has thrown price cuts as an idea to ride the short term snag. India Inc wants the government to restore confidence in the economy before that.