M A I N   N E W S

Refrain from large-scale lay-offs: PM
‘Deposits are safe, growth will continue’
Tribune News Service

New Delhi, November 3
Prime Minister Manmohan Singh today met leaders of industry and assured them that all monetary and fiscal measures would be taken to stimulate growth in the wake of the global economic crisis.

Dr Singh said the crisis had impacted corporates, banks and investor sentiment, but the country's financial system was stable and would function well in view of the monetary and fiscal measures taken by the government. He also assured the common man that the banking system and deposits were safe and the government would take more steps to protect growth.

“A crisis of this magnitude was bound to affect our economy. International credit has shrunk with adverse effects on our corporates and banks. Global uncertainty also tends to dampen investor sentiment”, he said during the meeting which was held to review the state of the economy in the face of the meltdown.

The Prime Minister also told the industry that the government was able to act more boldly because its efforts to contain inflation had been effective and asked it to refrain from any “knee-jerk reaction” such as large-scale layoffs, which might lead to a “negative spiral”. It must bear in mind its societal obligations in coping with the effects of this global crisis, which was now likely to be more severe and prolonged.

“Our first priority is to protect the Indian financial system from possible loss of confidence or contagion effect... the situation is abnormal and we need to be constantly on the alert. The situation is being watched on a day-to-day basis and more steps will be taken if required”.

The meeting was attended, among others, by Ratan Tata, Mukesh Ambani, K V Kamath, Shashi Ruia, Deepak Parekh and K.P. Singh. Finance minister P. Chidambaram, RBI Governor D Subbarao and Planning Commission deputy chairman Montek Singh Ahluwalia represented the government.

The Prime Minister said “the government will take the necessary monetary and fiscal policy measures on the domestic front to protect our growth rates”, and added that India would also seek reform of international financial institutions to prevent the recurrence of such a crisis.

“Indian banks are well-regulated and also well-capitalised. I think we have successfully conveyed to our people that our banking system, both in the public and private sector, is safe, and the government stands behind it and that no one should fear for the safety of bank deposits”.

Detailing the measures taken to infuse liquidity into the system to ensure adequate flow of credit, he said, “I believe the steps taken by us have made a substantial difference.Additional liquidity and reduction in the repo rate would help provide credit at reasonable rates”.The public sector banks had been instructed to ensure that they acted counter-cyclically in this situation to counter the general erosion of confidence.

Pointing out that expanding investment in infrastructure could play an important counter-cyclical role in the current situation, he said, “we will review projects and programmes in the area of infrastructure development, including both pure public sector projects and public- private partnership projects, to ensure that their implementation is expedited and they do not suffer from constraints of funds”.

Inviting the industry to join the government’s efforts to convert this global crisis into an opportunity for India, the Prime Minister said the country’s high savings and investment rates had been a great strength in the recent past and “we hope that the Indian corporate sector will not let the global crisis shake its confidence”.

While promising all necessary measures on domestic front, the Prime Minister said on the international front, “we are working closely with other countries to ensure coordinated policy action and increased development cooperation for the containment of this crisis.

Sensex back at 10

Mumbai: Continuing its upsurge for the fourth day in a row, the Bombay Stock Exchange benchmark Sensex today closed the day higher by nearly 550 points after regaining the 10,000 level in the opening trade itself. Marketmen said buying got a boost by RBI's cutting key rates over the weekend to inject an estimated Rs 85,000 crore into the system. The BSE barometer, which has been on a gaining spree since 'Muhurat' trading, advanced further by 549.62 points to close at 10,337.68 points.