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Manmohan to discuss ways to lift economy

business Updated: Nov 02, 2008 11:15 IST

PTI
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As part efforts to shore up confidence eroded by the global financial rout, Prime Minister Manmohan Singh will on Monday meet leaders of India Inc in New Delhi, which may seek more measures to tide over the liquidity crunch.

Ratan Tata, Anand Mahindra, Mukesh Ambani, Anil Ambani, KP Singh, Sunil Bharti Mittal and Deepak Parikh are among those expected to attend the meeting -- two days after RBI decided to inject another Rs 85,000 crore into the financial system by revising downward short-term lending rate and key deposit requirements for banks.

Presidents of the three apex chambers -- Assocham, CII and FICCI -- Sajjan Jindal, KV Kamath and Rajeev Chandrasekhar will also participate in the deliberations.

With the RBI providing Rs 2,65,000 crore in the last one month, one of the industry's main demands has largely been met. However, industry sources feel more was required since the overnight inter-bank lending rates are still quite high.

The RBI move to pump in money into the economy is in line with several central banks across the world providing more money to their cash-starved financial institutions.

While the government has given assurances on the safety of Indian banks, high interest rates ranging between 14-17 per cent have particularly impacted sectors like real estate and automobile. The aviation industry, which was provided a much needed help in the form of cut in jet fuel prices, is reeling under high cost of operations.

Business leaders are concerned over the plunge in industrial growth to 1.3 per cent in August from a high of 10.9 per cent in the same month a year ago, mainly on account of poor performance by the manufacturing sector which expanded by a mere 1.1 per cent.

For the five month period (April-August 2008-09), the industrial production growth rate stood at 4.9 per cent, down from 10 per cent during the corresponding period last year.

CII will seek setting up of a special purpose fund from foreign exchange reserves for meeting the foreign currency requirements of Indian banks.

The chamber is also seeking a guarantee from the government for bank deposits and a special corpus fund for small and medium enterprises.

FICCI will ask for a review of FDI caps in telecom, multi-brand retail and aviation. It is also seeking raising long-term money with an NRI-bond issue.