Fall in Indian shares echoes global cues: Chidambaram

March 3rd, 2008 - 2:57 pm ICT by admin  

A file-photo of P. Chidambaram

New Delhi, March 3 (IANS) The fall in Indian stock markets Monday reflect what is happening globally and there was not much cause for worry as India’s growth stock was intact, Finance Minister P. Chidambaram has said. “You switch on the TV at 10 a.m. I switch it on at 8 p.m. I see what has happened to Hang Seng, Nikkei,” the finance minister told a post-budget interaction with Indian industry at the Vigyan Bhavan conference centre here.

“The Asian markets have slipped today (Monday) because of the fears of a recession in the US. And what is happening in India only shows that we are not as decoupled as we may think we are,” he said.

“I don’t think we need to worry too much about that. This is reflecting what is happening in the world market,” he added, after the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) opened with a loss of 360 points.

At noon, the barometer index, that had closed the budget day with a decline of 245.76 points, or 1.38 percent, was ruling at 16,972.48 points, with a loss of 606.24 points, or 3.45 percent, over the previous close.

The finance minister also promised necessary interventions, working closely with the central bank, if India’s growth fell any further, adding that inflationary pressures had still not abated for the $1 trillion economy.

“If we grow enough food to feed our people, we are insulated. But if we depend on imports, we are subject to world prices,” he remarked and said global wheat and rice prices were up 80 percent and 15 percent since April last year.

“One reason why inflation is still a threat is because of food price inflation,” Chidambaram told the meeting amid pleas that the government should focus solely on taming inflationary pressures at the cost of growth.

The finance minister also sought to assuage the feelings of some 150 business leaders that his budget’s focus on the farm and social sectors must not be seen as lack of attention to the needs of industry.

“I have not forgotten the corporate sector,” he said, adding the industry must also not forget manufacturing and services sectors had been performing well and that the corporate sector was today globally competitive and making profits.

He said the lowering of central value added tax (Cenvat), freeze on peak customs duty, cut in central sales tax and much deeper cuts in taxes for some specified industries were all aimed at spurring industrial growth.

“You have my word - if some sector faces difficulties, if there is any signal that growth is flagging in some sectors, my government will certainly step in and try to see what can be done.”

He said the waiver of loan to the tune of Rs.600 billion ($15 billion) for an estimated 40 million farmers was not a first and said a similar step had also been taken in 1989-90.

“Taking all this into account, we came to the conclusion that the distress of farmers called for unorthodox responses. And that response was the farm loan waiver,” Chidambaram said.

The finance minister also expressed concern that the industry had not responded to the extent envisaged to the government’s invitation for adopting various Indian Technical Institutes (ITIs) that impart vocational training.

“It has taken three years to see 244 corporates sign on proposal to take over the ITIs. Why is corporate India so unwilling to take them over?” he asked and said there were 1,396 ITIs that needed a helping hand from industry.

At the same time, Chidambaram hoped that his proposal to establish a non-profit organisation to impart skill development, with a contribution of Rs.10 billion from the government, would see enthusiastic response from Indian industry.

The proposal calls for a capital of Rs.150 billion from both the government and the private sector to address the challenge of imparting the skills required by a growing economy to reap the potential the country holds for demographic dividend.

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