Assocham hails government steps, says demand picking up

November 20th, 2008 - 5:36 pm ICT by IANS  

New Delhi, Nov 20 (IANS) Industry lobby, the Associated Chambers of Commerce and Industry of India (Assocham) is greatly appreciative of the steps taken by the government to inject liquidity into the system and said Thursday that as a result of these steps demand has already begun to pick up.”Our government is doing a lot more than what any other government is doing and demand has already begun to pick up,” said Assocham’s President Sajjan Jindal at a press conference here after a meeting of the full committee of the chamber.

“Liquidity has gone up and as a result demand has begun to pick up and things should improve considerably within the next two months,” Jindal said.

He, however, said the stock markets and the real estate sectors have been very badly affected.

“A crisis of confidence is affecting the stock markets and real estate market has been affected because of high interest and other costs,” he said.

“Housing and construction is the key to reviving the entire economy and we want the government to bring down interest costs and also roll back the taxes that were imposed during boom times,” said K.P. Singh, chairman of India’s largest real estate firm DLF Ltd.

“The committee of the Assocham met this morning and we considered Finance Minister P. Chidambaram’s statement that industry should bring down prices to boost demand,” Jindal said.

“We came to the conclusion that prices are a function of demand and supply and since demand has come down prices have begun to come down and may come down further,” he added.

“But if taxes that were imposed in good times are reviewed and revised in view of the bad times now, prices will come down further,” he said.

Jindal also said that banks must provide more credit to the small and medium enterprises (SMEs) if the economy has to pick up the growth momentum.

“Two months back the banks had stopped giving even working capital but now they are writing to industry that they have surplus funds,” Jindal said.

“Still there is a crisis of confidence and banks must allot 20-25 percent of their funds for SMEs and extend credit at lower interest rates,” he added.

“We are very happy that the government has decided to come out with a package to bring down interest rates,” Singh said, adding “Once that happens real estate demand is sure to pick up, housing and construction activity will pick up and that will boost the entire economy.”

Regarding the steel industry, Jindal said that the industry is preparing a case as to why the government should impose anti-dumping duties on China, Thailand, Commonwealth of Independent States (CIS) and South Korea.

“We are preparing the papers and will give them to the government as soon as they are ready,” Jindal said.

He said steel demand has begun to pick up as liquidity has gone up and also oil and gas companies have launched many projects.

Jindal said his own steel company, JSW Steel, will begin working to full capacity from the beginning of December. Now capacity use is about 80 percent, he said.

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