Calling upon the automobile manufacturers, realty firms and airlines to reduce prices, Finance Minister P Chidambaram on Tuesday promised to consider excise duty cut for the sectors which are facing the heat of global financial meltdown.
"Hotels must cut tariffs; airlines must cut prices; real estate must cut rates of apartments and homes they sell; car makers and two-wheeler makers must cut prices," he said, while addressing industrialists at the Indian Economic Summit being organised by the World Economic Forum and the CII in New Delhi.
The Finance Minister also promised to examine the possibility of excise duty cut if required. "Any sector faces problem, I am open to examining suggestions on cut in excise duty rates," Chidambaram said.
India, he said, will record satisfactory growth in the current fiscal and the Gross Domestic Product (GDP) growth rate will bounce back during the next year.
Responding to the suggestion of Chidambaram to lower rates to generate demand, CII president K V Kamath said that industry would cut prices.
"Price cut is an initiative that industry will take. I think this is going to happen", the CII chief, who is also the managing director of the largest private sector lender ICICI Bank, said.
While pointing out that the time-tested response to demand slowdown has been to cut prices, Chidambaram said, "That is a much better option than allowing inventories to build up, non-performing assets (NPAs), lay off and retrenchment and digging a deeper hole."
As profit and loss accounts will take a hit, he said, "It is much better to keep your market share, keep your loyal workers with you, taking a price cut."
Referring to the external sector, the Minister admitted that "there is pressure on the rupee but once the flow is reversed, as we believe it will, ...it is quite possible that the rupee will climb upwards."
At the moment, he added, "There was a huge demand for dollars mainly coming from oil companies and others who have to meet the payment obligations. But it is quite possible that in a month or two that the direction of flows can reverse... and the rupee will settle at an appropriate level."Global meltdown: Complete coverage