There is scope perhaps for a further moderation in interest rates to ease credit flow for productive needs, the Indian Prime Minister, Dr Manmohan Singh, told the captains of Indian industry on Saturday. The RBI Governor, Dr D Subbarao, was also present on the occasion.

Demand for goods and services appears quite robust in rural areas and the outlook for the agricultural sector gives room for optimism, Singh said. We are monitoring the problems that persist in certain sectors and sub-sectors, particularly where export dependence is high. We are also aware that a big push to infrastructure would have a counter-cyclical influence and have taken steps to ensure that this happens in 2009-10 and beyond, Singh said.

The Prime Minister expressed satisfaction that sectors like steel, cement and automobile are showing signs of recovery as a result of various measures taken by the government to combat the slowdown. The government announced two stimulus packages, one in December and the other in January.

In these packages, and in subsequent announcements in the Interim Budget, the government announced various measures to the industry, exporters and the infrastructure sector to boost the sagging demand. The government also constituted an Apex group under the chairmanship of the prime minister to monitor the developments in the economy and take necessary measurers.

On the other hand, the Reserve Bank of India steadily adjusted the policy rates downwards and announced a number of steps to ease credit delivery to the housing and export sectors. Guidelines have been issued for restructuring of loans, increasing the rates on non-resident deposits and relaxing the criteria for external commercial borrowings.

However, borrowing cost for companies still remains high in double digits. While public sector banks have reduced their prime lending rates by up to 200 basis points in the last few months, private and foreign banks are yet to respond in equal measure.

The issues relating to the G20 nations' forthcoming meeting in London starting from April 2 was also discussed at the meeting. We will raise the issues of global protectionism and restriction on visa issuance at the summit, Singh promised the industry.

While we are decidedly better placed than most countries in the world, there seems to be uncertainty on how developments abroad, positive and negative, will affect us. The world today looks at India with respect and hope - respect for our calibrated reforms which have resulted in growth with justice, and hope that India would be an engine of global growth for the world economy, the Prime Minister said ahead of his leaving for London on March 31.

Tata Sons Chairman Ratan Tata, Aditya Birla Group Chairman Kumar Mangalam Birla, ICICI Managing Director and CEO K V Kamath, Essar's Shashi Ruia, RPG Group Chairman Ram Prasad Goenka, Adi Godrej (Godrej group), Sunil Mittal (Bharti Airtel) Sunil Kant Munjal (Hero group), and Baba Kalyani (Bharat Forge) attended the meeting.

Planning Commission Deputy Chairman Montek Singh Ahluwalia, Cabinet Secretary K M Chandrasekhar and representatives from industry associations the Federation of Indian Chambers of Commerce & Industry, the Confederation of Indian Industry and the Assocham were also present.

This was Singh's second meeting with the captains of Indian industry in less than five months. A similar meeting was last held in the first week of November last year, when India started experiencing the first shock waves of export demand attrition, constriction of capital inflows and liquidity shortage.

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