Millennium Post

Govt to handhold sectors hit by slowdown: FM

Open to handholding the stressed sectors, finance minister P Chidambaram on Thursday said government will work out a strategy to assist industry segments reeling under the impact of economic slowdown.

‘If the economy improves and growth improves, the sectors (which are not doing well) will recover. But in the meanwhile we will have to do some handholding and try to help these sectors recover’, he said while addressing a press conference after meeting the heads of public sector banks here.

The government will have to look at rising Non-Performing Assets (NPAs) sectorwise and find ways and means to help them, he said, adding the ‘NPA is a reflection of the slowdown in the economy.’

The NPAs of the public sector banking group have increased by 0.98 per cent in the one-year period ending September 2012 mainly on account of the stress being faced in sectors like infrastructure, steel, construction, textile, food process and telecom infrastructure, the minister said. On the positive side, Chidambaram said housing and automobile sectors have been doing well on back of decline in EMIs.

The minister said government would soon finalise capital infusion for the PSU banks and the beneficiaries would include Indian Overseas Bank, Central Bank of India and Bank of Maharashtra. The government had proposed to inject Rs 15,000 crore of capital in the PSU banks.

Stating that slowdown is a temporary phenomenon, the minister said the ‘situation is not alarming’ and would improve with recovery and bad loans would become standard accounts. India’s GDP has slipped to nine-year low of 6.5 per cent in 2011-12 and the RBI expects it to decline further to 5.8 per cent.

The first quarter of 2012-13 recorded a growth rate of 5.5 per cent while the figures for the second quarter will be released later in the month.

The latest Index of Industrial Production (IIP) data showed 0.4 per cent contraction in factory output in September on account.
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