A fresh stimulus package to hoist sagging economic growth is expected to be announced by the new Congress-led government with officials thrashing out the broad contours of a new set of measures.
This would include steps to shore up depressed demand and boost growth in the broader economy through higher public spending in sectors that can potentially multiply incomes across the real economy.
“The housing and infrastructure sectors are likely to be singled out for special attention as these can raise demand for goods among sectors such as cement and steel and drive consumption growth through greater income and additional employment generation,” said an official, who did not wish to be identified.
Besides, various measures to raise disposable incomes through easing of income tax norms are being considered, he added.
Prime Minister Manmohan Singh had said if voted back to power, his government would announce a fresh measures to revive the economy in the first 100 days.
Cabinet Secretary, K M Chandrasekhar has held a series of meetings with senior officials over the last two months to discuss the impact of tax breaks and fiscal measures announced before the elections.
Various ministries have prepared status reports about the key sectors to be presented to the new ministers shortly after they assume office.
The Finance Ministry has already set the ball rolling for a full budget presentation for 2009-10. The first round of pre-budget consultations commenced last week.
In recent months the government has taken a slew of fiscal measures, including sharp cuts in excise duties and increased plan spending to boost the economy.
But these incentives could push up the central government’s fiscal deficit to above 10 per cent of the GDP, including the charges the government is incurring in bonds used to keep oil prices under control, say government economists.
Gross government borrowings in first six months of the current fiscal year ( 2009-10) is set to cross Rs 2,41,000 crore.