Staff Reporter

ALAPPUZHA: Finance Minister T.M. Thomas Isaac, foreseeing an acute financial crisis in India too as a fallout of the global economic catastrophe, has called upon the Union government and the Reserve Bank of India (RBI) to initiate immediate steps to prevent such dangers.

Inaugurating the Builders’ Day celebrations and Charter Day of the Alappuzha Centre of the Builders’ Association of India (BAI) here on Sunday, Dr. Isaac said the RBI would have to shift from its present monetary policy to a fiscal policy. What the RBI was doing was to inject money into the system, particularly the banking sector, in the hope that this would increase bank lending and prevent the system from collapsing.

However, with borrowers not having enough confidence in the country’s economy to increase their investments, this would not work, the Minister said. The RBI and the Union government should instead focus on providing additional funds to public sectors like the Public Works Departments and the construction industry. This would encourage the production sector.

A boost to the construction industry was possible also by rewriting the norms and according more flexibility to States for utilising the National Rural Employment Guarantee Scheme. Availability of additional funds for States for this purpose had to be ensured, Dr. Isaac said.

He said the credit crunch faced by States was a crucial issue during such times. He said the State government was making efforts to revamp and streamline the construction industry in Kerala.