There may be good news in the offing for those bothered by high floating home loan rates.
The government is talking to banks to reset the interest rates of past home loan borrowers, including those who had taken loans under floating rates, Union home minister P Chidambaram told the Lok Sabha on Thursday.
Agreeing with the Opposition on the issue, Chidambaram, who was replying to a debate on the economic situation, said: “Yes, even floating rates must come down. We are talking to banks. They must reset interest rates of past borrowings.”
Chidambaram, who spoke in the presence of Prime Minister Manmohan Singh, was responding to queries from members about what relief would be given to those “reeling” under high interest rates for loans taken earlier.
Authorised by the PM to answer queries on the economy, Chidambaram said banks had announced special interest rates for loans up to Rs 5 lakh and for loans ranging from Rs 5 lakh to 20 lakh because “housing is an import driver of the economy”.
Chidambaram said he did not deny the problems. “We know that liquidity is the main issue. There is adequate liquidity in the system but, after the meltdown, there is credit aversion. Banks are unwilling to lend. We are talking to them to lend money to every productive sector. We have taken several rapid fire decisions.”
“We have to stimulate demand and maintain production. We took the bold decision of cutting the Cenvat by 4 per cent,” he added. He said the government was confident of ending the financial year with an overall 7 per cent growth rate.
Earlier, the Opposition led by the CPM warned the government to stop “hot pursuit of crony capitalism” and announce a comprehensive economic package while the BJP accused the “dream team of Manmohan Singh and Montek Singh Ahluwalia” of turning the economy into a “nightmare”.
“The government was engaged in hot pursuit of crony capitalism.... The number of billionaires in the country is rising,” CPM MP from Hooghly Rupchand Pal said. The BJP’s Ananth Kumar said: “The dream team of Manmohan Singh and Montek Singh Ahluwalia has brought nightmare to Indian economy.”
Kumar accused the UPA of following the “wrong strategy” which focused on the “khaas aadmi” (an euphemism for business houses) instead of the common people. “This government is concentrating on the special people by announcing spectrums and power plants. Note ke liye khaas aadmi aur vote ke liye aam aadmi (special people for money and commoners for votes),” he said.
Chidambaram sai the UPA had done much for the poor and needy sectors than the previous NDA regime. He cited statistics to buttress his case. “We are not the cause of the present economic crisis. But, you are talking about the growth rate because we made it possible.”