Nirmala Sitharaman assures industry of steps to revive economy

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Following a meeting with Finance Minister Nirmala Sitharaman on Thursday, India Inc is hopeful of receiving a stimulus from the Finance Ministry aimed at helping revive demand and consumption. The government is holding a series of consultations with industry to ascertain the key causes of the current slowdown and understand ways to fix the problem.

The meeting took place amidst core sector growth slowing down to a 0.2 per cent in June. The eight core industries – coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity – had grown 7.8 per cent in June 2018. Experts say, this performance clearly points to stagnation having set in Indian industry.

Industry has unanimously told the Finance Minister that credit availability is currently the key constraint and banks should be pressurised for better transmission of the central bank’s interest rate cuts to make available funds to industry at lower cost.

The liquidity crunch has been exacerbated by funds drying up for the non-banking finance company (NBFC) sector, while policy intervention in the form of a package is a must to revive industry, leading corporates told mediapersons here following the meeting with Sitharaman.

Tata Steel Chief Executive T.V. Narendran said the Finance Minister heard out the corporate honchos about a revival package being the need of the hour. JSW Group Chairman Sajjan Jindal said NBFCs, the steel and finance sectors were discussed with the Finance Minister.

“We discussed issues in NBFCs, steel and finance sectors with the Finance Minister. Government will announced the steps to revive the industry very soon”, he said.

Jindal also said there were discussions on credit availability. According to him, Sitharaman assured that a process would be put in place for transmitting the Reserve Bank of India’s (RBI) rate cuts to industry, which was a key point of Thursday’s discussion. According to the corporate leaders, the Finance Minister has also assured that there would be no punitive action on companies failing to meet their CSR obligations.

At Wednesday’s meeting with the Finance Minister, the auto industry too had sought a stimulus package to spur demand. Faced with the worst slowdown in a decade, automakers have sought a stimulus package consisting of GST reduction, more liquidity and relaxation of credit facilities for retailers.

Cautioning about immediate job losses if no remedial steps are taken, the Indian automobile industry has also demanded easing on lending by banks. They expressed concern that banks have been cautious about lending to both dealers as well as consumers. In a move to revive growth, consumer demand and lending to industry, the RBI on Monday cut its repo, or short-term lending rate to commercial banks, by 35 basis points to 5.40 per cent.