BUSINESS

PM to discuss economic crisis with corporate heads

Source:PTI
March 27, 2009 19:03 IST
Prime Minister Manmohan Singh is likely to discuss the impact of global demand contraction on Indian economy with industry leaders in New Delhi on Saturday, ahead of the G-20 summit in London next week.

Those invited for the interaction with the Prime Minister include Tata group head Ratan Tata, Reliance Industries chairman Mukesh Ambani and Reliance-ADAG group chairman Anil Ambani, Wipro chairman Asim Premji, Bharat Forge's CMD Baba Kalyani and presidents of FICCI, CII and Assocham.

The corporate honchos are expected to give key inputs to Singh for the summit of world's most influential developed and developing countries, to be held on April 2. The Prime Minister would be leaving for the summit on March 31.

High cost of finance and inadequate liquidity remain critical issues for the industry. Business leaders feel the Indian economy faces the paradox of near-zero inflation but high interest rates.

One of the problems, they say, lie with a high level of government borrowings which would be sucking out liquidity from the system, keeping pressure on interest rates.

The government will borrow an additional Rs 1,40,000 crore (Rs 1,400 billion) during the first half of next fiscal to fund its increasing public expenditure.  

The gross borrowings would be Rs 2,41,000 crore (Rs 2,410 billlion), Economic Affairs Secretary Ashok Chawla said yesterday after his meeting with Reserve Bank Governor D Subbarao.

As for stimulating the domestic demand, the government is constrained by the Election Commission's Code of Conduct in the run-up to general elections in implementing projects involving expenditure from the exchequer.

The industry, on the other hand, has been pressing for continuation of the government schemes, as announced in the interim budget last month.

Source: PTI
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