Chidambaram assures Indian Inc on ECB curbs

MAKING A PLEA: Chidambaram asked the industry not to raise prices of their products.

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Keywords: P Chidambaram, External Commercial Borrowings

New Delhi: The pressure from the Commerce Ministry seems to be working. At an interaction with industry association FICCI, Finance Minister P Chidambaram has finally accepted that more relief needs to be doled out to exporters including revisiting External Commercial Borrowings (ECB) curbs.

After a please-all budget, the worry of inflation has Chidambaram reaching out to industry. A day after he urged the public sector banks to reduce rates, Chidambaram asked the industry not to raise prices of their products.

In fact, he rattled off a series of industries which he said needed to pass on the budgetary benefits. This, he hopes will ensure India clocks an average of 8.8 per cent growth rate over the five-year term of the UPA government.

He also asked them to pass on some of the tax cut benefits to the consumer.

"Those industries who have benefited from this steep fiscal cuts - pharmaceutical, automobiles etc. must try to hold the price line," Chidambaram urged.

The government also hopes that growth will not decelerate. But many in industry feel that more needs to be done to protect them from the global slowdown.

Chidambaram's assurance that restrictions on ECB's curbs will be looked into did placate sentiment. ECB is a vital route of raising money from abroad for corporate India.

"ECB restrictions are temporary in nature. We could revisit them later," the Finance Minister said.

But such a move could mean more Dollar flows, which will harden the Rupee and hurt exporters again. It is a decision that could have the Commerce Ministry seeing red.

The Budget proved that Chidambaram has mastered the balancing act between good economics and politics but can he do the same between inflation and growth without hurting India Inc.