10 December, 2008

Rs 30,700-cr booster shot, is this enough?

Our government unveiled a Rs 30,700-crore fiscal stimulus package, mainly comprising additional spending and excise duty cuts aimed at boosting consumption, the latest in a flurry of measures being rolled out by policymakers keen to steer the economy away from a painful slowdown.

Here are some measures and their probable impact on economy:

Additional spending
MEASURE: Additional plan spend of Rs 20,000 crore
IMPACT: Will stimulate investments and demand

Separate bank packages
MEASURE: Government-owned banks to announce separate packages for home loans up to Rs 5 lakh and loans between Rs 5 lakh & Rs 20 lakh
IMPACT: Cheaper home loans. Will boost real estate industry, which would drive demand for cement & steel

Higher spending
MEASURE: Higher spend (to push up fiscal deficit)
IMPACT: Desirable in times of contraction

Export incentives
MEASURE: Export incentives of over Rs 2000 crore—special incentives for textile, handloom, handicraft, gems & jewellery, leather and marine food
IMPACT: Cheaper credit and more increased availibility of debt, but exporters want more

Tax-free bonds
MEASURE: IIFCL to raise tax-free bonds of Rs 10,000 crore
IMPACT: Money to be used for refinancing long-term loans for infrastructure projects in ports, highways and power