TNN

New Delhi, Nov 19: Finance minister P Chidambaram on Tuesday called on sectors like housing, automobiles, hotels and airlines to cut prices to boost demand and beat the slowdown. 

The auto sector ruled this out as unrealistic in the current situation, while airlines — looking for a lifeline from the government — seemed more receptive to the suggestion. Real estate companies, however, remained noncommittal.

"The classic response to the demand slowdown is to cut prices," the finance minister told the India Economic Summit here. He said builders should cut prices on houses, cars and two-wheelers should cost less and airlines and hotels should reduce prices.

Nudging corporates to be satisfied with a lower profit margin, Chidambaram said the margin of profit after tax was at 30% and in the slowdown may have come down by half, which is still not bad. He said this was the time for consolidation while expressing optimism that by the second quarter of 2009-10 (July-September next year) the economy would be back on a high growth trajectory of around 9%.

The FM assured industry that he has spoken to banks, which are ready to offer easy consumer loans to boost demand, but said the cost of goods should first come down.