Second package to boost economy soon: Montek

The government will come out with a second stimulus package for this fiscal and one for 2009-10 in the next few days to spur economic growth, reeling under the impact of global financial crisis.

"We are trying to coordinate a number of different steps. And I hope in the next few days we will be ready to make an announcement (about the second stimulus package)," Planning Commission deputy chairman Montek Singh Ahluwalia told reporters in New Delhi on Monday.

He said there were different things coming from different people and that they were referred to Cabinet Secretary K M Chandrasekhar.

"I am hoping that we will get something. I can assure you that the main thing is to make sure that expenditure we have already provided and the new expenditure, gets done. In the Planning Commission, we are not proposing any new expenditure for the current year," Ahluwalia said.

With industrial production contracting by 0.4 per cent in October, for the first time in 15 years, and the exports declining by over 12 per cent during the month, the government came out with a stimulus package on December 7 to spur growth and help the industry combat the impact of global financial meltdown.

As part of the stimulus package, the government cut excise duty by 4 per cent across the board, except on petroleum products, and announced raising of the public expenditure by Rs 20,000 crore (Rs 200 billion) to boost demand.

The government has also increased public expenditure by Rs 1.47 lakh crore (Rs 1.47 trillion) through two supplementary demands for grant over Rs 7.5 lakh crore (Rs 7.5 trillion) provided in the Budget for 2008-09.

Noting that the world economy was going to be worse next year, Ahluwalia said, "We are working...the stimulus is not just for this year."

The task, he added, was to prepare a suitable fiscal strategy, both for this year and next year.

Although the package for 2009-10 would be relevant for the new government, he said the Government could announce its intentions in the Vote-on-Account in Parliament.

"Next year we are working on. It will only be relevant for the new government. If we have a vote-on-account, the government can announce its intentions," the Planning Commission deputy chairman said.

As the general elections are due in April-May, the government will have to come out with an interim Budget in February to seek the approval of Parliament for the necessary expenditure during the first four months of the next fiscal.

Indian economy grew by 7.8 per cent in the first half of this fiscal against 9.3 per cent a year ago and there are fears of further slowdown, ending the year with a growth rate of seven per cent.

As per the World Bank estimates, the global economy is likely to slow down to below one per cent in 2009 from 2.1 per cent in 2008, while the global trade, which has implications for Indian exports, is likely to shrink by more than two per cent.

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