Govt forms panel on economic crisis' impact on India

New Delhi: The Union Government has constituted a committee to consider issues raised by India Inc on global financial crisis and its impact on India.

"Prime Minister has approved constitution of a committee of officers to be chaired and convened by Finance Secretary to consider issues raised by industry with regard to the current global financial situation and its impact on India," an official release on Friday said in New Delhi.

Trade and industry may send their suggestions to the committee, which will have its secretariat at the North Block, the release added.

Besides Finance Secretary Arun Ramanathan, the committee will have Commerce Secretary GK Pillai, Department of Industrial Policy & Promotion (DIPP) Secretary Ajay Shanker and Planning Commission Secretary Subhash Pani as members.

Earlier this week, Prime Minister Manmohan Singh had interacted with the captains of Indian industry on impact of global financial crisis on India.

"A crisis of this magnitude was bound to affect our economy and it has. International credit has shrunk with adverse effects on our corporates and banks. Global uncertainty is also tending to dampen investor sentiment," the Prime Minister had said at the meeting.

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He asked industry to refrain from any "knee-jerk" reaction such as large-scale lay-offs, which might lead to a negative spiral.

"Industry must bear in mind its societal obligations in coping with the effects of this global crisis," which the Prime Minister felt "is now likely to be more severe and prolonged," he had said.

Another committee, headed by the Prime Minister to coordinate the government's response on industry's concerns in the wake of the global financial crisis, has already been set up.

It comprises Finance Minister P Chidambaram, Industry and Commerce Minister Kamal Nath, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Reserve Bank of India Governor D Subbarao.

The Reserve Bank has injected over Rs 2,60,000 crore into the system through cuts in reserve ratios and short-term rate (repo rate), to deal with the shortage of money supply.

Following this, many banks have announced cut in benchmark lending rates, which would offer credit to both corporates and individuals at lower rates.