Rising fuel prices may hit growth: FM

Union Finance Minister P Chidambaram today said rising fuel prices were a cause of concern. He said at present, there was enough investment for the gross domestic product (GDP) to grow at a rate of 7 per cent but, if the fuel prices continued to increase, it could affect the GDP and the interest rates. Inflation has risen 1 per cent after the recent increase in fuel prices.

Speaking at the platinum jubilee celebrations of Vijaya Bank here, the finance minister said the government would implement the Vaidyanathan committee's report on how to strengthen the rural credit delivery system and would also evaluate the structure and functioning of the co-operative societies.

"The restructuring will cost Rs 15,000 crore," he said. This was discussed at the recent conference of the chief ministers and the consensus packages have already been sent to the respective states. "The government has given 10 days to the states to respond," he added.

He also said pilot projects to deliver rural credits through the well-established network of post offices were being undertaken.

Chidambaram said three major agencies for credit "" commercial banks, regional rural banks and primary agriculture credit "" had to work in tandem to improve the delivery mechanism. "Organisational elections for primary agriculture credits are a farce," he said.

He also said the credit agencies must come up with innovative ideas for increasing the credit delivery mechanism, as more than 5 crore farmers were deprived of institutional credit.