The Hindu Business Line : Economy will need another booster dose next fiscal

New Delhi, Dec. 19 The Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, on Friday reiterated the need to properly implement the fiscal stimulus package announced by the Government earlier this month.

Mr Ahluwalia also said that the economy will need another stimulus package during the next fiscal as the global slowdown will continue for some more time.

“It is certainly my view that the need for fiscal stimulus will not end this fiscal and will go beyond that,” he said on the sidelines of a function organised to celebrate the 75th birthday of economist Prof Amartya Sen.

The function, which was attended by the Prime Minister, Dr Manmohan Singh, was jointly organised by Cornell University and the Institute for Human Development.

The Deputy Chairman of the Planning Commission was of the opinion that the fiscal deficit is likely to be higher mainly on account of the package announced by the Government.

Commenting on inflation falling further, Mr Ahluwalia pointed out that it had already come down and might come down further.

The Government had on December 7 announced a “multi-dimensional” fiscal stimulus package that included additional Rs 20,000-crore Plan expenditure. It had also announced an across-the-board 4 percentage point reduction in cenvat rate to stimulate demand in the economy.

The cenvat duty cut resulted in the Government foregoing excise duty revenues of Rs 8,700 crore during the remaining months of the financial year.

The fiscal stimulus package also included a 2 per cent interest subvention for the labour intensive export sectors and steps for improving the financial environment for infrastructure projects.

On the monetary side, the Reserve Bank of India has been taking a slew of measures since October 2008 to minimise the impact of global financial meltdown on the Indian economy.