NEW DELHI: The government is expected to come out with a second stimulus package in the next few days to lift slowing growth. This may include steps to ease liquidity and relief measures for export and housing sectors, commerce and industry minister Kamal Nath said on Wednesday.
More measures would also be taken to maintain the growth momentum in employment generating sectors like textiles, steel and pharmaceuticals. The government would also introduce stricter safeguards in the form of stringent anti-dumping laws in these sectors to protect the domestic industry against cheap imports, the minister said.
Mr Nath said the government is looking at real estate industry’s demand for lower interest rates on loans advanced to houses in the bracket of Rs 30-40 lakh. He indicated that the RBI was looking at taking monetary steps aimed at ensuring availability of funds at lower cost. He said the government was considering possible duty cuts for more goods to stimulate demand in the economy.
The second stimulus package comes in the backdrop of the economy registering a 0.4 % fall in industrial growth in October and exports a 12.1% fall during the month. Commerce ministry’s quick estimates predicted a similar decline in November too, though the data is awaited.
The government had cut excise duties by 4% across-the-board in the package announced on December 7. The last package also involved raising public expenditure by Rs 20,000 crore. In addition to the fiscal stimulus, the Reserve Bank of India reduced key ratios and policy rates, releasing about Rs 3,00,000 crore into the system, and signalled a soft interest rate regime.
The government on Tuesday told Parliament that it was confident of the economy growing at 7-8% this fiscal, against last year’s 9%. India’s economy expanded an annual 7.6% in the September quarter.
The measures taken so far this year to fire up the economy could expand the country’s fiscal deficit by 2% to around 5%, chief economic advisor in the finance ministry Dr Arvind Virmani had said in the government’s mid-year review of the economy.
Policymakers feel this is an year of extraordinary crises and the response should match its magnitude. Dr Virmani had also said that the country could contemplate measures that may have been unthinkable a year ago. Former finance minister P Chidambaram too had said that this is not an year to worry about fiscal deficit.
Source : The Economic Times