Chidambaram bats for cheaper housing loans

March 6th, 2008 - 5:27 pm ICT by admin  

A file-photo of P. Chidambaram

New Delhi, March 6 (IANS) Finance Minister P. Chidambaram Thursday made another pitch for commercial banks to cut interest rates for their consumers, especially on housing loans up to Rs.2 million that accounted for 80 percent of exposures. “I made a number of efforts to impress upon bankers in this regard,” he told a post-budget interactive meeting here with members of the Associated Chambers of Commerce and Industry (Assocham).

“Bankers will have to take a call. The Reserve Bank will have to take a call,” said the finance minister, concluding his post-budget meetings with the three major industry chambers.

Chidambaram has also been maintaining that it was the task of the central bank to ensure that inflation is under control and that his government’s policy was to encourage growth with reasonable inflation.

“It is his (central bank governor Y.V. Reddy’s) call what should be the interest rates in order to contain inflation and promote growth,” the finance minister maintained.

The finance minister also said that banks would certainly be compensated for the loan waiver announced for an estimated 40 million farmers worth a whopping Rs.600 billion ($15 billion).

“Banks will be compensated,” he said, without specifying how he intended to.

He also justified loan waivers to small and marginal farmers and argued that the corporate sector enjoyed much more exemptions than the amount of Rs.600 billion that would be waived by the government exchequer for the farmers.

Chidambaram also turned down the demand of Indian Inc on double taxation - both on the sale of shares and on declaration of dividends, while contending that they were separate issues.

“The idea is to ensure that people stay invested for 366 days or more,” he said, referring to the proposal to hike the tax on short-term capital gains on sale of equity to 15 percent from 10 percent.

The finance minister had earlier met members of the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry to outline his perspective behind the budget and get their feedback.

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