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'Stimulus package to restore confidence' - Dr Mitra, FICCI
05
Jan '09
By combining monetary as well as fiscal measures, the 2nd Stimulus package addresses a wide range of concerns and should hopefully give big boost to the slowing economy. It is a set of positive measures towards boosting growth and indeed a timely follow up on the initiatives taken by the government already.

We hope that following this business confidence would be restored”, said Dr. Amit Mitra, Secretary General, FICCI. The chamber believes that the authorities will review the impact of these measures and fine tune policies on a continuous basis. “We further hope that these measures would be followed by a series of measures as we go along and as the situation demands”, he added.

The stimulus package has five elements – interest rates lowered, additional liquidity infused, export sector given some aid, infrastructure sector boost and easier access to ECBs and FIIs. These together should give a boost to the economy.

FICCI has particularly welcomed the downward revision in the repo rate and the reverse repo rates and we hope this would help bring down the lending rates in the economy. Further, an additional Rs. 20,000 crores infused in the system through the CRR cut should leave more liquidity at the hands of the bank. “It is now important for banks to come out and on lend to corporates rather than invest money in government securities as they have been doing earlier”, observed Dr. Mitra.

FICCI welcomes the steps taken for the export sector that have been particularly badly hit. The restoration of the duty draw back rates for select sectors and the extension of the DEPB scheme till 31st December 2009 will help improve the competitiveness of exporters.

The specific fiscal measures announced for the housing sector, the construction sector and the commercial vehicle sector would help push up demand and this should hopefully re-activate these select sectors.

Finally, the removal of the interest cap on ECBs and the lifting of the ceiling of foreign investments (FII) in corporate bonds from US$ 6 billion to US$ 15 billion would help bring in greater foreign funds into the country

FICCI

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