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India to boost spending to beat slowdown, says Sinha

Finance Minister Yashwant Sinha said on Saturday increased public spending by the government by October this year would help arrest an ongoing slowdown in the economy.

"I have been talking to my ministry officials and by October a lot of action around public expenditure is likely to happen. I am hoping of a turnaround in the economy this year," Sinha told reporters.

The Finance Minister said the government had initiated a number of steps in the Union Budget for 2001-02 to boost public expenditure.

Asked how he would generate resources for public spending when the government's revenues were down, Sinha said: "Our revenues should start doing well when the economy does well."

He added that he hoped a normal monsoon would also help in reversing the slowdown.

The government on Friday released figures that showed that the economy had expanded by just 5.2 per cent in 2000-01, sharply down from the earlier estimate of six percent, leading to concerns the economy was in a far worse shape than earlier expected.

Sinha said he would be meeting officials of the Reserve Bank of India and commercial banks to discuss ways to beat the slowdown, but said any decision on lowering interest rates would be left to the RBI.

Sinha ups micro-credit target to Rs 175 bn by 2004

Sinha raised the targeted micro-credit flow mainly to women self-help groups to Rs 175 billion in three years from the present Rs 70 billion in a bid to boost the tiny sectors of the economy.

"Till now net bank credit to women is 2 per cent amounting to about Rs 70 billion of the total credit. The target should be to increase it to 5 per cent amounting to Rs 175 billion in three years," Sinha said at a seminar on 'Credit Flow to Women'.

While shortening the time period of achieving the desired target from five to three years, Sinha suggested that each rural bank branch should constitute a 'consultative group' comprising five women which promote higher credit flow to the rural women.

He said such group should be set up at the zilla, district, state and national levels so that there is regular interaction with the government.

Sinha urged banks to step up credit to the women recovery self-help groups specially in the rural areas as the recovery from this segment was almost 100 per cent.

Currently, there are over 2,63,000 self-help groups and 90 per cent of them are run by women entrepreneurs covering 4.5 million rural families.

Viewing this, Sinha said: "We should stress on the rural areas."

In the coming years, NABARD and other banks should target to bring in 1 million such groups under micro-credit financing, Sinha he said.

Additional inputs: PTI

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