Stimulus package to boost output, counter slowdown. – Ramesh Sharma

‘Multi-dimensional’: The Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, with the Cabinet Secretary, Mr K.M. Chandrashekhar, and the Finance Secretary, Mr Arun Ramanathan, at a press conference in the Capital on Sunday.

New Delhi, Dec. 7 In a bid to minimise the impact of the global economic slowdown on the Indian economy, the Government on Sunday unveiled a “multi-dimensional” fiscal stimulus package that is expected to help boost output across sectors and stoke growth.

The measures include an additional Plan expenditure of up to Rs 20,000 crore this fiscal, an estimated excise duty give-away of Rs 8,700 crore, a 2 per cent interest subvention for the labour-intensive export sectors and steps for improving the financing environment for infrastructure projects.

“We will make special efforts to ensure that not only the additional expenditure of Rs 20,000 crore is spent this year, but even what has been budgeted is actually spent to support the growth of the economy,” the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, told a press conference here.

On the excise duty front, the Government has effected an across-the-board cut of 4 percentage points in the ad-valorem cenvat for the remaining part of the current fiscal on all products other than petroleum and those where the current rate was below 4 per cent. Prior to the latest change, the three main ad-valorem excise rates applicable on non-petroleum products were 14 per cent, 12 per cent and 8 per cent.

India Inc had urged the Government to reduce excise duties when the latter had exhorted corporates to cut prices of finished products to tackle demand slowdown.

With the Government now responding favourably, indications are that the private sector producers would do what the Government had wanted them to do in terms of reducing prices. Mr Ahluwalia noted that market forces will make sure that producers will be under strong competitive pressure to pass on the excise duty benefits to consumers.

‘No direct tax cuts’

source: Businessline