"We had met in the first week of November last year, in the shadow of the meltdown which had originated from global macroeconomic imbalances, and problems in the financial sector of the developed world, and reached the shores of the rest of the world. India had also started experiencing the first shock waves of export demand attrition and constriction of capital inflows. Besides, the Indian financial sector was facing a liquidity shortage. Overall sentiment had also been dampened by the impact of the crisis on global and domestic capital markets and the consequent attrition of the savings of many individuals and corporates.

Many valuable suggestions were received in that meeting. These related to the need to maintain adequate liquidity, problems of credit flow and credit cost on the domestic and foreign fronts, special issues of certain stressed sectors, possible fiscal and other measures, and steps to ensure that domestic industry is not adversely affected by the dumping of products by other countries.

I had immediately after the meeting constituted an Apex Group under my Chairmanship to monitor the developments in the economy and take the necessary measures. Since then, the Government and the RBI have, from time to time, come out with measures which were considered necessary and possible. The RBI has steadily adjusted the policy rates downwards and has announced a number of steps in support of MSMEs, NBFCs, and the housing and export sectors. Guidelines have also been issued for restructuring of loans, increasing the rates on non-resident deposits and relaxing the criteria for external commercial borrowings. The Government has announced two stimulus packages, one in December 2008 and the other in January 2009. In these packages, and in subsequent announcements in the Interim Budget, a number of measures have been taken to provide relief to exporters; CENVAT, service tax, and duty concessions to industry; and support to infrastructure projects, and to increase Government expenditure despite an elevated level of fiscal deficit. The Government has also been in touch with banks and has been monitoring the sectoral credit flows, especially by the public sector banks. The Cabinet Secretary has been interacting with the Chief Secretaries of States, as almost the entire additional budgeted amounts have been released to the States and their role in ensuring expenditures on ground is now crucial.

While we need to bear in mind that the time taken for these steps to take effect varies across measures and sectors, there are signs of improvement in sectors like steel and cement. The auto sector after a difficult patch seems to be showing signs of recovery. Food grain production for 2008-09 is likely to be in excess of 228 million tonnes. The rural demand for goods and services appears quite robust and the outlook in the agricultural sector gives room for optimism.

At the same time, we are aware of the problems that persist in certain sectors and sub-sectors, particularly where export dependence is high. We are monitoring these sectors. We are 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. On the credit front, the figures of the RBI at the end of February 2009 indicate that while the credit growth of public sector banks on a year-on-year basis this year has been 23 per cent against 21.9 per cent of the corresponding period of 2007-08, the credit growth of private banks and foreign banks has been of the order of one-third to one-fourth of what it was a year ago. While public sector banks have reduced the prime lending rates in the last three months between 150 and 200 basis points, other Scheduled Commercial Banks are yet to respond in equal measure. With ample liquidity and low inflation, there is scope perhaps for a further moderation in interest rates. Domestic credit flow for productive needs has to be definitely maintained at reasonable cost.

We are, therefore, in a situation where on the one hand we are decidedly better placed than most countries in the world, on the other hand, there seems to be uncertainty on how developments abroad, positive and negative, will affect us. To tackle a regime of low inflation and demand uncertainties across sub-sectors of the real economy, to ensure that the financial sector remains healthy and supportive, to husband foreign exchange reserves responsibly, to sustain a high level of expenditure bearing in mind the need for fiscal discipline, and to act continuously to improve general sentiment are challenges that we confront as a nation. We need to be particularly sensitive to the impact of the slowdown on the weakest in the organized as well as the unorganized sectors. We must meet the challenge of job losses caused by the slowdown. These are challenges which can be understood and met only if all the stake-holders concerned continuously exchange ideas and support each other with confidence in the future, and concern for the well being of all. I have great faith and confidence in India's entrepreneurs and particularly in the wisdom and experience of captains of industry assembled here today to meet the challenges confronting our economy. 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. I am confident that we will all work together to fulfil these expectations, and secure the growth essential for our people. I would now request your comments and your assessment of the present economic situation and the steps taken so far and to suggest what needs to be done in the immediate as well as medium term future."