'Tap domestic market first'

Finance Minister P Chidambaram today asked banks to fully tap the opportunities available in the agriculture, infrastructure and small scale industries sectors in the country, but said the government was not directing credit to any sector.

"We are certainly not attempting to direct credit. We don't interfere with the price mechanism or the selection of borrowers," he said at the Bankers' Conference (Bancon), 2004.

Chidambaram's statement came in response to an observation by International Monetary Fund First Deputy Managing Director Anne O Krueger yesterday, when she said the governments of many emerging markets preferred to rely on directed credit as they attempted to pick winners in the drive to industrialise.

She had said the world over governments found it hard to resist "the temptation to show they can do better than the market".

Chidambaram said Indian banks needed to effectively tap opportunities within the country to realise their aspirations of succeeding abroad.

"There is a huge opportunity within India in agriculture, agri-business, small and medium enterprises, non-farm activities, infrastructure, self-help groups and micro finance business," he added.