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I fully endorse the views in the article “Wrong doctor, wrong treatment,” (Business Line, February 26) that policy rate cuts by the Reserve Bank of India to stimulate industrial investment as a measure to counter the economic slowdown is going to be an abortive attempt.

Unless there is demand for products, no wise businessman will go for borrowings and they cannot go on piling up stocks. On the other hand, banks are also reluctant to lend in a situation where is there is no turnover for recycling and repayment.

Similarly, the suggestion that the government should place orders for steel, cement, software, etc., as a solution to the global meltdown may not work. What will the government do with these products? Where is the money for payment?

Is it suggested that the government should book orders for purchase of textile garments and give them to the public free of cost?

The government should not be an employment office, recruiting people during an unemployment crisis; it should, instead, create an environment that generates more job opportunities.

The RBI, along with the rate cuts, should amend the provisioning norms in respect of bank assets, which, as per the guidelines, become non-performing assets when either the instalments or interest is due for a quarter.

It may be amended to 12 months instead of three months so that banks come forward to lend without fear.

The borrowers would also not be subjected to repay the amount immediately. This will mitigate the problem to some extent.

Above all, we have to understand that our economy is not independent but interdependent on world economy.

As a result, if there is any slowdown and recession worldwide we too have to suffer the consequences. They cannot be resolved overnight by interest rate movements and stimulus packages.

G. R. Nagarajan Madurai

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