HIS ECONOMIC ADVICE: Manmohan Singh says tackling inflation remains goverment’s priority.
Indians banks are safe and depositors need not worry for their money, Prime Minister Manmohan Singh has told Parliament for the first time after the worldwide financial crisis.
“Our banks, both in the public sector and in the private sector, are financially sound, well capitalised and well regulated. There should be no fear of a failure of any bank,” Singh said in the Lok Sabha on Monday.
“I wish to assure depositors in our banks that their deposits are entirely safe.” Singh, however, warned that the economy might slow down.
“The financial storm has shaken confidence in the system and precipitated a steep decline in stock markets. It has produced a sharp slowdown in economic activity, with the prospect of a prolonged recession in industrialised countries,” he said.
There is enough capital, but “nevertheless, we must be prepared for a temporary slowdown in the Indian economy”.
Singh said the precise impact of the global financial crisis was difficult to estimate but the economic slowdown in developed countries is likely to have an “indirect impact” on the Indian economy.
Some estimates projected GDP growth to reduce to 7.5 per cent in the current year, but “our effort will be to minimise the negative effect of the financial crisis… to return to the growth trajectory of 9 per cent.”
The Prime Minister said the Reserve Bank of India (RBI) and the Government were carefully monitoring the flow of credit and would ensure that the additional liquidity infused into the system translated into actual credit.
“We will not hesitate to do more, if needed. While the capital adequacy ratios of all our banks are well above the Basel norm and above the RBI stipulated norm, government has promised that it will help banks, which have lower ratios, to access funds to increase the capital risk-weighted asset ratio to 12 per cent,” he said.
The economic crisis will be the big issue after Parliament reconvenes on Friday even as the session is expected to be a short one.
The session is also expected to be stormy with the United Progressive Alliance Government facing fire from the Opposition on many other issues.
With General Elections next year and five states going to polls starting November 14, there are many issues like the global financial crisis and its impact on the Indian economy, terror attacks, communal riots, price
rise and the Indo-US nuclear deal, which the Opposition will try to raise.
It could also be the last session under the leadership of Manmohan Singh.
But with elections for Assemblies of Delhi, Rajasthan, Madhya Pradesh, Chattisgarh and Mizoram already announced, there are many who feel that there is no point of continuing with a month-long session.
So it might well be cut short by at least 10 days to allow leaders to campaign aggressively in a poll that is already been billed as mini General Election.
“Whenever we need to have something, we will discuss it. There is no hard and fast position on that because political exigencies can definitely come,” Parliamentary Affairs Minister Vayalar Ravi said.
An estimated Rs 25000 are spent per minute on Parliament’s activity.
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