Saturday, March 4 2006 14:53 Hrs (IST) - World Time -

New Delhi: The Reserve Bank today (Mar 04 2006) promised to ensure adequate liquidity in the economy so that productive sectors are not hampered and starved of funds for investment.

"RBI will provide liquidity to all productive sectors of the economy so that the growth story is not hampered," Finance Minister P Chidambaram told sources after the customary post-budget meeting with the Reserve Bank Board.

He said RBI and Government will work to put in place a system to implement the Budget provision for concessional short term credit to farmers for the coming Kharif and Rabi crops.

The budget had announced that farmers would be provided with this crop loan at a concessional seven per cent interest rate to deal with the problem of indebtedness, particularly small and maginal farmers. This will cost the exchequer Rs 1,700 crore in a year.

Chidambaram said he has asked RBI to ensure there is adequate liquidity so that growth story that is unfolding is not hampered.

He said RBI was also appreciative of the efforts in the Budget to bring about fiscal prudence and increase the tax-GDP ratio beyond 11 per cent.

"Our adherence and commitment to FRBM target in the budget was appreciated, so also the efforts to raise tax-GDP ratio to over 11 per cent," he said.