The Hindu Business Line : India Inc expresses concern over Govt’s borrowing

New Delhi, Aug. 11 In a meeting on Tuesday with the Prime Minister, Dr Manmohan Singh, the FICCI President, Mr Harsh Pati Singhania, expressed concern over the massive borrowing programme of the Government in this fiscal, which might push up interest rates.

He said while there were some signs of recovery, availability of credit was essential to sustain growth.

Mr Singhania said while public sector banks have brought down interest rates, private sector banks have not followed suit. He also said there were concerns about the drought-like situation. “We fear that this could lead to inflation driven by agri-commodity shortages. We have to manage this.”

The FICCI President called for new equity sources and a deeper and wider debt market, including corporate bond market, for addressing the long-term funding needs of corporates.

To tackle the issue of micro, small and medium enterprises (MSME) not receiving the benefits of low interest rates, Mr Singhania suggested the opening of a separate stock exchange for MSMEs and a Government-sponsored equity fund for the same.

The Government has paid heed to some of the suggestions put forward by the industry. FICCI had recommended restarting the disinvestment process, focussing on building infrastructure and promoting investment in agriculture, among others.

Disinvestment

Regarding disinvestment, the process of initial public offering of NHPC Ltd and Oil India Ltd is underway. The Government has also indicated that a comprehensive road map for disinvestment would be announced soon. NMDC and Manganese Ore India Ltd have also been identified by the Steel Ministry for disinvestment.

The FICCI President welcomed the news that the India Infrastructure Finance Company Ltd will refinance 60 per cent of commercial bank loans for private-public partnership projects. He, however, added that long standing issues such as land acquisition and environmental clearances still prove to be a major hurdle for infrastructure projects.

With a weak performance expected from the agricultural sector this year, Mr Singhania said the manufacturing sector needs a further push. He urged the Prime Minister to initiate implementation of the National Manufacturing Competitiveness Council’s recommendations.

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