Be ready for painful adjustments: Chidambaram

18 Dec 2008, 2044 hrs IST, PTI

NEW DELHI: The government today said the country would have to be prepared for a "painful period" of adjustments because of the global crisis but expressed confidence
that economy would still grow by 7 per cent and bounce back next year.

Home Minister P Chidambaram, who was fielded to reply to the debate on the economic situation in the Lok Sabha, acknowledged that this year has been "difficult" but said the government was taking steps to ensure that productive engines of economy including agriculture, industry and services continue to function.

"We will ensure that economy continues to grow. We will ensure that the growth this year is seven per cent," he said. India recorded a growth of nine per cent in 2007-08 and this year, RBI had projected a growth rate of 7.5 to 8 per cent.

He said the government would prevail upon the banks to lend funds to the productive sectors of the economy.

"Prime Minister and I (was Finance Minister) met the bankers and prevailed upon them to lend. The lending has already started by the end of November...banks will lend to every productive sectors of the economy," he said.

Describing housing sector as a main driver of the economy, he said bankers are being prevailed upon to cut home loans of the existing customers.

The Minister further said that an apex committee under the Prime Minister was monitoring the situation and would take necessary steps to boost the economic growth.

Referring to the stimulus package announced by the government on December 7, he said, "we announced this package to keep economy growing for next three months. If there is capacity to absorb more capital we are ready to give more."

As regards growth, Chidambaram said, "recovery would start in the second half of the next fiscal. Next year, we are confident that economy will bounce back...I am confident the world output will also bounce back."

Ram Kripal Yadav (RJD) hoped that the Prime Minister would take steps to formulate schemes to help the common man when country was facing the affects of global meltdown.

He said both organised and unorganised sectors were facing the consequences of the economic crisis.

M Ramadass (PMK) said India was not facing major problems due to the global financial crisis as Manmohan Singh, when he was the Finance Minister, had accepted certain recommendations of experts on finance and adopted policies accordingly.

Yerrannaidu (TDP) said the government should create more liquidity through banks in the infrastructure sector.

S K Bwiswmuthiary (Ind) and Ganesh Singh also participated in the debate.