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No interest cut now,says PM to industry leaders

New Delhi, July 30 () : Prime Minister Manmohan Singh told the industry leaders that reduction in interest rate will take place only if the rupee strengthens.

This reply came during the discussion summoned by Prime Minister Manmohan Singh with industry captains yesterday. India Inc asked for immediate rate cut and wanted Government to give priority to reviving investment sentiment and industrial growth.

The meeting agenda was to get industry leaders’ views by Prime Minister on efforts for stabilizing the rupee and the impact on trade and industry, push industrial growth and measures to bring down the current account deficit.

Industry trade body heads, IT, Telecom , manufacturing and auto sector majors were represented in the meeting. Rana Kapoor (Assocham), Krish Gopalakrishnan (CII) and Naina Lal Kidwai (FICCI) from the trade bodies along with N R Narayana Murthy(Infosys), Azim Premji (Wipro), Rahul Baja (Bajaj) Sunil Munjal (Hero) Sunil Bharti Mittal ( Bharti) and Mukesh Ambani (Reliance) were present.

Any policy be it fiscal or structural reforms should be tweaked to supplement each other and create investor confidence, said Kidwai., She pointed out that already many sectors have asked those on contract to go on leave and this will spread to those on the rolls .

If the growth graph is not reversed, then unemployment will be more, she added. CAD can be tackled by mopping up savings from the public, said Kapoor. PSU banks and post office saving instruments in small denominations that are inflation proof , the existing SB accounts and PPF too can have this clause and removing tax on interest from such savings were the suggestions by Assocham President.

Yesterday, Finance Minister P. Chidambaram told in Ahmedabad that the interest rates are not expected to increase and enough credit facility will be available for industry. He sounded optimistic about the effect of good monsoon on the economy and in turn SMEs are showing growth. This sector will be given enough credit by banks.

He appealed to the public to cut purchase of gold as it was eating into the foreign exchange reserves which could have been otherwise used for developmental activities. In 2012, India paid $50 billion and in 2014 March, the bill would be for 1800 tonnes, he revealed and asked as to how the money would be raised to pay it. FM said that if economic situation demanded issuing sovereign bonds then it will be done.