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Govt to mop up surplus bank credit at low interest rate: PM

In a bid to avert an economic crisis on account of slowdown, the government on Friday asserted that it would mop up surplus credit from banks and financial institutions at a 'low and declining interest rates' to plough it in public investment.

"We have decided to mobilise large-scale additional resources for investment in developmental projects and programmes," Vajpayee said in his opening remarks at the meeting of the Advisory Council on Trade and Industry in New Delhi.

Surplus credit in banks and financial institutions would be fully utilised for investment in various developmental projects and programmes, made attractive by the low and declining interest rates, he said.

"Interest rates are softer than ever before. We have reduced taxes and made the tax regime simpler to stimulate growth. I would like industry and trade to make full use of these measures," Vajpayee said.

The prime lending rate of banks now stands at 12.50 per cent ever since the central bank had effected 100 basis points reduction in PLR in two tranches.

Additional funds raised through a combination of budgetary and non-budgetary sources would be channelised into innovative and productive public spending, combined with a prudent strategy of fiscal management and inflation control, the PM said.

The rate of inflation for the last week stood lower by 35 basis points at 5.48 per cent compared to 5.83 per cent in the same period a year ago.

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