Minister of Finance Pranab Mukherjee while pressing the Budget 2009-10 in Lok Sabha on Monday has said that the government has taken several measures to counter the negative fall -out of the global slow down on the Indian economy.
Firstly, the government responded by providing three focused fiscal stimulus packages in the form of tax relief to boost demand and increased expenditure on public projects to create employment and public assets.
Secondly, the RBI took a number of monetary easing and liquidity enhancing measures to facilitate flow of funds from the financial system to meet the needs of productive sectors.
The minister said that this fiscal accommodation led to an increase in fiscal deficit from 2.7 per cent in 2007-08 to 6.2 per cent of GDP in 2008-09. The difference between the actual of 2007-08 and 2008-09 constituted the total fiscal stimulus.
This fiscal stimulus at 3.5% of GDP at current market prices for 2008-09 amounts to Rs 1,86,000 crore.
The Mukherjee pointed out that these measures were effective in arresting the fall in growth rate of GDP in 2008-09 and we achieved a growth of 6.7 per cent.
He said that the efforts would be continued to provide further stimulus to the economy. - PIB