NEW DELHI: The government on Thursday said the country would have to be prepared for a 'painful period' of adjustment because of the global crisis but expressed confidence that the economy would still grow 7% this year and bounce back next year.
Home Minister P Chidambaram, who was fielded to reply to the debate on the economic situation in the Lok Sabha, acknowledged that this year has been 'difficult' but said the government was taking steps to ensure that productive engines of economy including agriculture, industry and services continue to function.
"We will ensure that economy continues to grow. We will ensure that the growth this year is 7%," he said. The economy recorded a growth of 9% in 2007-08, and RBI has projected a growth rate of 7.5-8% this year.
He said the government would prevail upon banks to lend funds to the productive sectors of the economy. "Prime Minister and I met the bankers and prevailed upon them to lend. The lending has already started by the end of November...banks will lend to every productive sectors of the economy," he said.
Describing housing as a key driver of the economy, he said bankers are being prevailed upon to cut home loan rates of existing customers.
The Minister further said that an apex committee under the Prime Minister was monitoring the situation and would take necessary steps to boost the economic growth.
Referring to the stimulus package announced by the government on December 7, he said: "We announced this package to keep economy growing for next three months. If there is capacity to absorb more capital, we are ready to give more."
On growth, Chidambaram said: "Recovery would start in the second half of the next fiscal. Next year, we are confident that economy will bounce back, I am confident the world output will also bounce back." (source : UTV)
Rupesh Yatesh Dalal
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