KICK-STARTING THE ECONOMY

Rs 50,000-cr push waiting in the wings

Stimulus package may be part of first Budget presented after elections

Shantanu Nandan Sharma NEW DELHI

 Ahigh-powered panel is thrashing out a mega economic stimulus package with a kitty of Rs 50,000 crore, which may be part of the first Budget of the next government at the Centre, said an official who didn’t want to be named. Ajay Shankar, secretary, department of industrial policy and promotion (DIPP), who is a member of the panel headed by cabinet secretary KM Chandrasekhar, confirmed that another booster measure was in the works to kick-start the economy.
    “We have drawn the contours of this package. It’s for the next government to finalise it,” he told SundayET. “We have to keep the stimulus going though we need to be fiscally responsible. Its aim will be to substitute the decline of private investment with public expenditure,” he said.
    Other members of the panel include secretaries of the finance and commerce departments, and a secretary of the Planning Commission.
    SundayET had reported on January 25 quoting deputy chairman of Planning Commission Montek Singh Ahluwalia that the government had begun the process of preparing another fiscal stimulus package for FY09-10.
    Though no one was willing to risk a guess on the size of the package, SundayET learns it will constitute 1% of GDP, or roughly Rs 50,000 crore. The package is likely to be a part of the budget to be presented before June 25, 2009, if not announced earlier on a stand-alone basis.
    According to Mr Shankar of DIPP, impacts of the two fiscal packages announced earlier were already visible. Some of the sectors have started recovering. Many expansion plans announced by private sector companies are actually taking place, Toyota’s small car plant in Bangalore being an example, he said. Mr Shankar also said the country had clocked in foreign direct investment of over $25 billion till February, which is more than what was raked in the earlier fiscal.
    The government had earlier announced two fiscal packages in addition to the Indian central bank RBI’s monetary interventions to boost the economy. The earlier fiscal measures also liberalised various rules and regulations to increase liquidity and give a boost to spending. While announcing the earlier packages, Planning Commission deputy chairman Montek Singh Ahluwalia said the government’s initiatives were mainly to ensure that the growth momentum was intact.
    shantanu.sharma@timesgroup.com 

 

 

 

 

 

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