Economy will be back on track by October: Govt

New Delhi: Union Home Minister P Chidambaram on Tuesday said that the Indian economy will soon be on an upswing and hoped that it would happen by the end of 2009.

Chidambaram welcomed the two per cent excise duty cuts saying it would help stimulate demand and help the economy bounce back.

"By the beginning of the third quarter of 2009-10, by October, we will find an upturn in the economy," Chidamabaram, who was finance minister till November last year, said while presenting the National Tourism Awards said in New Delhi on Tuesday.

"The present downturn is temporary. Our growth rate is expected to be well over seven per cent," he said noting that despite a downturn in global scenario, India has managed to achieve seven per cent growth.

He attributed this to domestic consumption and demand.

Commending the performance of Indian businesses and industry during the global downturn, the Minister said India stood out as a "shining example" of a resilient economy when the world was engulfed by economic gloom.

"We owe this resilience of Indian business and economy to its ability to quickly adjust to changing times. But in no other country, I have seen businessmen adjusting so rapidly (to the situation). That is why we were able to hold our head high," he said.

During difficult times, Chidambaram advised that one should take "hard decisions" like cutting prices as a "natural response" to the downturn.

"Cutting prices is not a reflection on one's quality or ability. It is a natural response to an economic decision. Those who have cut prices will not go through slump," Chidambaram said.

"It is important in economic downturn to remain in business, to maintain the clientele. If you lose your loyal employees, loyal clientele ... It will take many years (to get back on track). We must ensure that we remain in business," he said.

Chidambaram said the terror attacks in Mumbai in November last year had left a "scar" which will take many years to heal. "There was a cloud over the tourism sector since the dastardly attacks," he said.

Congratulating the staff and management of Trident and Taj hotels for starting their operations very soon after the attacks, he said the government has taken a number of measures to increase security like the Central Industrial Security Force (CISF) amendment bill so that its cover can be given to private institutions.

He said the occupancy rate in February would be slightly better than January.

The Minister said a lot of work has to be done in hospitality, hotels and tourism sector with regard to Commonwealth Games 2010.

"Hope we are not behind. We must double up our efforts to rise to the occasion," he said.

Meanwhile, the Central Government has cut excise and service tax by two per cent from Tuesday. The cut will see consumer durable prices fall and houses will also get cheaper.

Both excise and service tax are now eight per cent from the earlier mark of 10 per cent.

In addition, the two per cent excise cut announced in December has been extended beyond March 31.