Govt to ask banks to cut rates, says Pranab

Concerned over high credit cost and availability of funds, Finance Minister Pranab Mukherjee on Wednesday said he will ask banks for a 'benign plan of action' while committing to stimulate economic growth by stepping up public expenditure and speeding up reforms.

"Industry and business have been hurt by the cost of finance and its easy availability. . .  the cost and the speed with which finance can be accessed remains a matter of concern.

"One of the first steps I propose to take is to meet bankers and get them committed to a more benign plan of action," Mukherjee said at his first press conference since taking charge as Union finance minister earlier this week.

Listing out the concerns and constraints being faced by the economy, he said there was no alternative to pushing up growth in tandem with employment for which the government is willing to increase its borrowings.

Text: PTI

"Let me say unambiguously that we are committed to restoring growth and employment and that would not have been possible without increased spending funded by incremental borrowing. This would need to be further continued in 2009-10," Finance Minister Pranab Mukherjee said.

"However, we are equally committed to the process of fiscal consolidation over a period of say 2 to 3 years," he said, exuding confidence that early return to recent growth performance would help attain fiscal prudence.

Mukherjee also said he will present the full Budget for 2009-10 in the first week of July. He said the UPA had in its manifesto committed to presenting the Budget within 45 days of formation of the government.

Keeping that deadline in mind, the Budget for 2009-10 will be presented in the first week of July, he said, adding that the government would endeavour for the Budget to be passed before July 31.

Reviving growth momentum of the economy will be the top priority for Prime Minister Manmohan Singh-led government but revival would not be at the cost of fiscal prudence, he said.

Mukherjee said the industry and business hit hard by cost of finance and its easy availability and he would meet bankers soon to get them committed to more benign plan of action to boost credit and its flow.

Mukherjee said the prime focus of the Budget will be "Aam Aadmi" (common man) but will also lay stress on infrastructure spending. The government has eased liquidity situation considerably through a series of measures taken by RBI," he said, adding that he will be meeting bankers soon to take stock of the situation.

"I expect that they (banks) will take advantage of the Monetary Policy. I will have to see that the credit is being made available," he said.

On the GDP expansion, the finance minister said that 6.5-7 per cent growth rate is a respectable growth for the current fiscal.

Asked about the inflation target for 2009-10, he said that the rate of price rise at 0.61 per cent (for the week ended May 9) is reasonably down and provides enough leverage.

Mukherjee said that the government is equally committed to fiscal consolidation over 2-3 years and it will also make anti-money laundering regime stronger.