Click to play videoNew Delhi: The Government on Sunday announced a Rs 20,000 crore fiscal stimulus package to boost the economy, but a dissatisfied India Inc said there isn't much to cheer about.
The measures proposed under the package include:
- A 4 per cent cut in Cenvat rate on non-petroleum products
- An additional Rs 350 crore for export incentives
- An additional Rs 1,400 crore for the textile sector
- Infrastructure Finance Company Ltd to raise Rs 10,000 crore through tax-free bonds by March
- PSU banks to announce package for home loans up to Rs 20 lakh
- Import duty on naphtha to be eliminated to boost the power sector
- A refinance facility of Rs 7000 crore for SIDBI to facilitate credit flow to SMEs
- Export duty on iron ore fines to be eliminated
Dr Amit Mitra, Secretary General of FICCI, said “The fiscal package is pointing in the right direction, but more could have been done to increase the growth trajectory."
The Government, however, defended its move.
"This is not necessarily the only thing that we are going to do, it has to be in case that we have to watch the situation closely and both on the monetary and on the other side all relevant authorities have taken the view that we won't hesitate to take additional action if necessary," said Planning Commission Deputy Chairman Montek Singh Ahluwalia.
The government appeared confident that the stimulus package would ensure an economic growth rate of 7 per cent, as the across-the-board 4 per cent excise duty cut, additional expenditure of Rs 20,000 crore and measures taken by the RBI would boost demand for industrial goods.
Indian economy grew by nine per cent in 2007-08 and, according to estimates of various think tanks and Reserve Bank, is estimated to slowdown in the current fiscal mainly on account of the fallout of the global financial meltdown which has pushed economies of several developed nations into recession.
Maruti chairman RC Bhargava told CNN-IBN that the company will pass on the 4 per cent cut in Cenvat to consumers. That also means that a cut in prices may be announced as early as midnight of Sunday, dawn of
Real estate developers are unhappy with the package. The sector has expressed that it's an eyewash and does not provide anything for the sector.
"I am completely disappointed from the fiscal package. We were expecting much more. The package gives only an eye wash. They are talking of only upto 15-20 lakh but what is available in this country? Input costs and taxes are too big at this point of time," said Chairman of Parsvnath Developers, Pradeep Jain.
Exporters are disappointed too. They say the package falls short of their expectations.
CNN IBN asked the Commerce Secretary, G K Pillai if a second installment was in store, especially for the exports sector.
"Yes, we would look at if there were any other sectors that are facing difficulties in the coming months because the slide in exports has begun technically in October and November. So we will look at whether there are any other, especially the labour employment sector that need help. we would definitely look at that too. But for the time being, in light of the global slowdown, this is really a basic sort of cushion that we are trying to give the exporters, so that they are not too adversely affected," said the Commerce Secretary.
The stimulus package, which was approved by Prime Minister Manmohan Singh, is aimed at boosting the growth by cutting taxes, increasing public expenditure and ensuring flow of credit to infrastructure, construction and housing sectors.
(With inputs from agencies)
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