Forget spending on infrastructure to boost industrial production and growth, Finance Minister has urged state-run banks to increase lending for consumer durables. As if to say, it would help boost industrial production and growth.
"Consumers must be encouraged to buy consumer durables," Palaniappan Chidambaram said after a meeting with chairmen of public-sector banks. "I think the point has been well taken by the banks," a Reuters reported has said.
With interest rates at elevated levels, consumers are unlikely to go and borrow for consumer durables.
And, interest rates are unlikely to go down any time soon, given high inflation in the economy.
India's industrial production has slumped and industrialists are hankering for a rate cut. There's no way that one segment of industry (consumer durables) is going to make any impact on industrial production, which has been contracting sharply over the last few months.
The Index for Industrial Production (IIP) for June had come in at -1.8% for June, confirming a sharp slowdown in industrial activity. Mining, Manufacturing and Electricity sectors activity for the month of June 2012 stood at 124.3, 178.1 and 157.0 respectively, with the corresponding growth rates of 0.6%, (-)3.2% and 8.8% as compared to June 2011.