Chidambaram hints at easing interest rates

New Delhi: Finance minister P Chidambaram on Monday said the government was conscious that current interest rates were high and vowed to take measures to spur investment and ease the burden on consumers.      "High interest rates inhibit the investor and are a burden on every class of borrower, be it a manufacturer of goods or a purchaser of a home or a two-wheeler or a student who takes an education loan," Chidambaram said. "Sometimes it is necessary to take carefully calibrated risks in order to stimulate investment and to ease the burden on consumers. We will take appropriate steps in this regard," the finance minister said. Rising interest rates have increased the payout on home loans and have hurt auto and apartment sales.      The Reserve Bank of India (RBI) left interest rates unchanged in its latest policy review last month and highlighted the heightened inflationary pressures. It also put the onus on the government to reduce the stubbornly high fiscal deficit and restore the health of public finance for interest rates to come down. The RBI had raised interest rates 13 times since March 2010 to tame stubbornly high inflation. It eased policy rates by a surprising 50 basis points in its April review but had cautioned about inflationary risks. Since then, it has left interest rates unchanged twice. High interest rates have been cited as a key reason for the slowdown in growth and sluggishness in industrial growth.      "There has been pressure on prices, and inflation—especially food inflation—is high. The causes are well known; some are beyond our control, such as prices of crude oil and imported commodities, but some others can be addressed by determined action," he said. "We will use our food grain to moderate prices, where necessary, we will enhance the import of items in short supply," he added.      Chidambaram said the government was confident that inflation could be moderated in the medium term. "Fiscal policy and monetary policy must point to the same direction and must move in tandem. Government will work with the Reserve Bank of India to ensure that inflation is moderated in the medium term," he said. Erratic monsoon rains have raised concerns over growth and prices but Chidambaram said the government will take steps to provide relief to the people living in drought affected districts, protect wage employment and save agricultural production.      "MNREGA and other schemes will be converged to meet the challenges of drought. We must seize the opportunity to build durable assets that will provide employment to the poor as well as help in drought-proofing agriculture in the affected districts," the finance minister said.