Rural economy likely to be one of the budget focus
By Vaibhav Aggarwal
Jun 9, 2009
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The Congress-led United Progressive Alliance Government is likely to present the budget in first week of July.

Commenting on the budgetary focus, M D Mallya, Chairman and Managing Director, Bank of Baroda, said, "We expect the main focus to be on infrastructure, rural economy and education in the Union Budget."

Before the budget presentation, the finance minister is scheduled to meet the banking chiefs on June 10. Mr. Mukherjee is expected to review the annual performance of the banks in context of key areas like agriculture, micro, small and medium enterprises, housing and education.

Stating that the agenda of the pre-budget meeting, Mallya said, it would be a routine quarterly meet, with discussions revolving around corporate performances, credit demands and interest rate scenario.

It is expected that the UPA Government will lay its strategy in areas of infrastructure and rural development, following this pre-budget meeting.

S A Bhat, Chairman and Managing Director, Indian Overseas Bank, said, "Interest rates are expected to come down. A sharp cut in deposit rates can be expected which can come down to 6 percent."

"We are working out our cost of deposits. It will come down depending upon retail inflation rates. We see credit growth picking up soon. We also see inquiries from fertiliser, airlines and retail sectors," he added.

After joining his office on 25th May, 2009, the finance minister had stated the manifesto of the new UPA Government is to present the Union Budget within 45 days of its coming into power. "We will adhere to this schedule and propose to present the Budget in the first week of July. The regular budget 2009-10 exercises are underway in full swing," said the minister.

Mr Mukherjee had advocated the importance of economic revival, while keeping in mind the fiscal prudence. In his latest communication, the finance minister had issued a directive to the banks to furnish the interest rates details on consumer loans, housing loan, vehicle loans and SME loans. He also stated that the banks must reduce the lending rates, considering the demand for low cost fund.

PSBs have lowered the benchmark lending rates by 150 basis points over past 6 months. However, bankers deny scope for further reduction of the lending rates.


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