Assures India Inc. of all steps to sustain growth momentum
NEW DELHI: Prime Minister Manmohan Singh on Monday admitted that the global downturn in the wake of the ongoing financial crisis was likely to be severer and more prolonged than anticipated and assured India Inc. that the government would take all possible steps to help sustain the growth momentum.
At a review meeting here with captains of industry to assess the impact of the global meltdown, Dr. Singh conceded that the global liquidity crisis was dampening investor sentiment and the domestic industry. The banks too were affected, although the banking system was safe.
“The financial crisis has exacerbated a global downturn that was expected earlier, but is now likely to be more severe and prolonged. A crisis of this magnitude was bound to affect our economy and it has … International credit has shrunk with adverse effects on our corporates and banks. Global uncertainty is also tending to dampen investor sentiment,” he said.
However, even while tackling the “unprecedented” grim situation, the corporates should refrain from resorting to any “knee-jerk” reaction such as large-scale layoffs, the Prime Minister said. For, the stringent step might lead to a negative spiral. “Industry must bear in mind its societal obligations in coping with the effects of this global crisis,” he said.
While India Inc. was represented, among others, by Ratan Tata, Mukesh Ambani, Shashi Ruia, Deepak Parekh, K.P. Singh and the three apex chamber chiefs — K.V. Kamath (CII), Rajiv Chandrasekhar (FICCI) and Sajjan Jindal (Assocham) — the government side comprised Finance Minister P. Chidambaram, RBI Governor D. Subbarao and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
Pointing to the severity of the global crisis while asserting that the government was closely monitoring the situation for taking urgent proactive steps whenever required, Dr. Singh said: “Our first priority was to protect the Indian financial system from possible loss of confidence or contagion effect ... We recognise that the situation is abnormal and we need to be constantly on the alert. The situation is being watched on a day-to-day basis and more steps will be taken if required ... The government will take necessary monetary and fiscal policy measures on the domestic front to protect our growth rates.”
Noting that India would seek global financial reforms (at the G-20 Summit) to prevent the recurrence of such crisis, Dr. Singh sought to take industry into confidence and detailed the various measures taken to tackle the crisis.Related storiesManmohan to meet top corporate leaders todayRBI cuts rates, assures more stepsSensex crashes on eve of DiwaliManmohan blames it on 'casino' capitalism, regulatory failureBJP: crisis home-grown, Chidambaram should goDesist from panic sales of shares: FMManmohan: our banks are entirely safeRepo rate cut