Date:30/12/2008 URL: http://www.thehindu.com/2008/12/30/stories/2008123059810500.htm

Tamil Nadu - Chennai

“Our financial crisis started before global meltdown”

Special Correspondent

— Photo: K. V. Srinivasan

MOMENT OF HONOUR: ICICI Bank chairman N. Vaghul presenting an award to Daniel Dass, chairman, Chennai chapter of the PRSI, in Chennai on Monday. PRSI national vice-president R.K. Dharan (left) is in the picture.

CHENNAI: India’s financial crisis started much before the global meltdown and it might take much more time to recover, ICICI Bank chairman N. Vaghul said on Monday.

Addressing a seminar on ‘worldwide economic recession-what it means to us’ organised by the Chennai chapter of the Public Relations Society of India (PRSI), he put the crisis down to faulty policies, abysmal infrastructure and inaction on the part of the government to tackle corruption.

“Our economy is structurally mal-adjusted. The real fiscal deficit is running at 8 per cent, and there is no real reduction in it for years together. For the past 60 years, we were never able to provide basic infrastructure. Subsidies are like an alternative to social security. But, we have not seen whether it is going to the right people. We have not done anything to tackle corruption,” he said.

Mr. Vaghul said it took nearly six years (1996-2002) for the Asian financial crisis to blow over. This time, it would be much faster. For this to happen, the government should concentrate on and invest in infrastructure.

“No miracle”

“Almost all the sectors, apart from liquor, healthcare and entertainment, will be affected by the crisis. There is no miracle to take us out of it. In the short term, we have to go through the pain. As corporate affairs persons, we have to take steps to minimise the pain of our employees,” he said.

As for the global meltdown, Mr. Vaghul said: “The crisis originated from the financial sector owing to indiscriminate lending. It is a chaotic and complicated situation. It is hard to say when it will end or whether President-elect Barack Obama can make the difference. The crisis can elbow its way into 2011.”