The Hindu Business Line : Multi-sectoral stimulus package on the anvil

New Delhi, Dec 2 The Government is likely to announce a multi-sectoral package by early next week to give a booster dose to the economy, with key thrust on financial, export and housing sectors.

In his first high-level meeting after taking charge of the Finance portfolio, the Prime Minister, Dr Manmohan Singh, presided over an apex panel that was set up to consider, among others, counter-cyclical measures to tackle the slowdown in economy.

An official source, who attended the meeting, said the respective ministries and Reserve Bank of India are likely to make announcements on the packages early next week. “The package could run into hundreds of crores… I don’t want to talk about the numbers now,” the source said.

The Union Home Minister, Mr P. Chidambaram, the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, the RBI Governor, Mr D Subbarao, the Chief Economic Advisor, Mr Arvind Virmani, the Finance Secretary, Mr Arun Ramanathan, the Commerce Secretary, Mr G. K. Pillai, and the Revenue Secretary, Mr P.V. Bhide, were among those who attended the meeting.

The Commerce and Industry Minister, Mr Kamal Nath, did not attend the meeting as he was out of town.

On Monday, at an industry event, Mr Ahluwalia had suggested that the Plan panel had made certain proposals in this direction, which he hoped would figure in the apex committee’s discussions, including a ramping up of infrastructure financing by leveraging the forex reserves. IIFCL has already been rupee-financing the infrastructure projects, besides having access to the RBI window for dollar financing through IIFCL’s UK subsidiary. The Prime Minister had earlier suggested a counter-cyclical expansion of investment.

Measures that are under contemplation now by the PM’s apex panel include interest subvention for certain export sectors and propping up infrastructure financing using IIFCL.

In a bid to give a fillip to the export sector, the Commerce Ministry has been making out a case for interest subvention for some sectors.

In the context of the slowdown, industry segments have been looking at a further cut in CRR and SLR. Proposals such as interest rate cuts for the small and medium enterprises and exporters were cleared by the Committee of Secretaries last week. The committee has already looked into sectors such as textiles and gems and jewellery.

Merchandise exports declined 12 per cent in October on a year-to-year basis to touch $12.8 billion due to a severe demand slowdown in the US and Europe.

The Commerce Ministry feels that it may not be in a position to achieve the target of $200 billion set for the current fiscal.

A formal review of the export target is likely at the end of the month.