FM asks airlines, auto & realty firms to cut rates

New Delhi, Nov 18 (PTI) Calling auto-makers, realty firms and airlines to reduce rates, Finance Minister P Chidambaram Tuesday promised to consider excise duty cut for sectors that are facing the heat of the global financial meltdown.

"Hotels must cut tariffs; airlines must cut prices; real
estate must cut rates of apartments and homes they sell; car
makers and two-wheeler makers must cut prices," he said, while
addressing industrialists at the India Economic Summit
organised by the World Economic Forum (WEF) and the
Confederation of Indian Industry (CII) here.

His suggestions were aimed at stimulating consumer
spending, a slowdown in which has eroded the output of
manufacturing and other sectors with negative implications for
economic growth.

The Finance Minister also promised to examine the
possibility of excise duty cut, if required.

"Any sector faces problem. I am open to examining
suggestions on cut in excise duty rates," Chidambaram said.

India, he said, will record satisfactory growth in the
current fiscal and the Gross Domestic Product (GDP) growth
rate will bounce back during the next year.

Responding to the suggestion of Chidambaram to lower rates
to generate demand, CII president K V Kamath said that
industry would cut prices.

"Price cut is an initiative that industry will take. I
think this is going to happen", the CII chief, who is also the
managing director of the largest private sector lender ICICI
Bank, said.

While pointing out that the time-tested response to demand
slowdown has been to cut prices, Chidambaram said, "That is a
much better option than allowing inventories to build up, non-
performing assets (NPAs), lay off and retrenchment and digging
a deeper hole."

As profit and loss accounts will take a hit, he said, "It
is much better to keep your market share, keep your loyal
workers with you, taking a price cut."

Referring to the external sector, the Minister admitted
that "there is pressure on the rupee but once the flow is
reversed, as we believe it will, ...it is quite possible that
the rupee will climb upwards."

At the moment, he added, "There was a huge demand for
dollars mainly coming from oil companies and others who have
to meet the payment obligations. But it is quite possible that
in a month or two that the direction of flows can reverse...
and the rupee will settle at a appropriate level." PTI