Date:29/11/2008 URL: http://www.thehindu.com/2008/11/29/stories/2008112957290500.htm

Other States - Rajasthan

“Terror strikes will hit investments in short term”

Sujay Mehdudia

Economy will overcome ups and downs: FM

Union Finance Minister P. Chidambaram

UDAIPUR: Union Finance Minister P. Chidambaram on Friday conceded that the latest wave of terror strikes in the financial Capital of the country would hit the investors’ confidence in the short run but asserted that the Indian economy is resilient and will overcome any ups and downs in the long run.

Addressing a press conference here during his election tour of Rajasthan, Mr. Chidambaram said the worst ever terror attack on the country would certainly have a negative impact on investor sentiment and investments in the short term.

“However,” he added, “despite whatever has happened in Mumbai, India remains by and large an attractive investment destination. Even New York, London, Indonesia and other countries have been hit by terror attacks. But they have emerged out of the shadow of such negative developments. India, and especially Mumbai, will also come out of this situation after a few weeks,” he added.

Mr. Chidambaram said it was a mix of private and public sector policy that had virtually insulated the Indian economy from any major impact of the global financial crisis.

He made it clear that the Government has no plans to divest its stake in the public sector banks below the 51 per cent level.

“There will be no divesting of government holding in PSU banks below 51 per cent,” he asserted.

Referring to the impact of the slowdown on the textiles, mining, exports and housing sectors, Mr. Chidambaram indicated that a ``package” was on the way to provide help to these sectors. ``Representatives of these sectors have met us and given their representations. They are being studied by the Finance Secretary and soon the Government will take action on this front,” he stated.

Replying to a question, Mr. Chidambaram said there was no evidence to suggest that non-performing assets (NPAs) of banks were increasing due to default in payment of loans or instalments during the past few months. ``I personally have been looking at this issue every week and there is no trend to suggest any such development,” he added.