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Govt aware of need for greater liquidity
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NEWSX on 08 October, 2008 06:32:39
 
Asserting that fundamentals of Indian economy are still strong despite global
financial crisis, Finance Minister P Chidambaram admitted on  that the system
faces some liquidity problem which will be addressed.
"There is liquidity problem. But, we will address the liquidity issue. (RBI)
Governor is already on record, if necessary he will take further measures to
infuse liquidity," Chidambaram told reporters in New Delhi.
He said the Government is fully alive to the need for greater liquidity in the
Indian market.
"Of course, liquidity will be provided. Everybody in the world is doing it. We
are not affected to the same extent (by global financial crisis), but to the
extent there is shortage of liquidity in the Indian market, we will provide
liquidity," he said.
He, however, said every Indian must be confident that the economy is still a
growing economy.
"My firm opinion is that fundamentals of Indian economy are still strong.
Economy is still humming with activity and it is growing," Chidambaram said.
Chidambaram said the RBI measure to infuse Rs 20,000 crore liquidity through
cut in mandatory cash deposit requirement for banks, CRR, will kick in from
Friday as Thursday is holiday.
He also referred to the SEBI measure to relax curbs on participatory notes and
the Government's move to include mining, refining and exploration in
infrastructure to enable them to access greater amount of overseas debt.
To buttress his arguments that fundamentals of Indian economy are strong,
Chidambaram said there is high investment, many sector are showing impressive
growth, tax collections are good and exports as well as imports are rising,
besides banks are well capitalised.
Quoting a report by the Centre for Monitoring Indian Economy (CMIE), the
Finance Minister said cumulative investment is extremely high.
"Investment at the end of June 2008 is little over Rs 66 lakh crore against Rs
44 lakh crore at the end of June 2007. In July, there has been further
investment of Rs 2.18 lakh crore and in August, another Rs 1.32 lakh crore," he
said.
These are the investment intentions that have been announced and firmed up, he
said. Chidambaram also said all banks are well capitalised and capital adequacy
ratio is in between 10 percent to 13.65 percent, well above the Basel norms.
The Finance Minister said indirect tax collections are over the target and
growing by over 14 percent. "Customs revenue collections for September are
higher than the average for April-August."
On direct tax front, personal income tax collections have grown by 23.4 percent
and corporate tax collections by 35.3 percent, he added.
The Commerce Ministry has reported that exports have grown in dollar terms by
35.1 percent in April-August, while imports have risen by 37.7 per cent,
Chidambaram said.
"Many sectors have shown very impressive growth rate. Coal, mining,
automobiles, chemicals and chemical products, construction sector. Railway
revenue earnings traffic grew by 9.4 percent," he said.