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PMO to unveil more measures to spur growth

business Updated: Dec 06, 2008 11:00 IST

PTI
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After reducing fuel prices on Saturday, the government will unveil more measures tomorrow to stimulate growth through cuts in excise duty on commercial vehicles and increased investment in infrastructure, while the RBI will give a signal to banks to slash interest rates.

The package -- to be announced by the Prime Minister's office -- is meant to counter the impact of the global downturn and would be big enough to revive the confidence, Commerce and Industry Minister Kamal Nath said here.

"This will not be a single package. There will be a first package, second and third part," Nath said here.

Reserve Bank Governor D Subbarao will announce cuts in the short-term (repo) lending rates at which banks borrow money from the central bank. Analysts said the cut in rates could be up to 100 basis points.

Exporters facing recession in the US and several European markets will get easy and subsidised credit from banks and the total sops would be above Rs 2,000 crore, a senior official said.

The real estate sector, which is going though tough times due to fall in demand, can get relief with small borrowers getting loans at concessional rates.

The government today lowered the petrol price by Rs 5 and diesel by Rs 2 litre, following a sharp drop in international crude prices.

This, according to ICRIER Director Rajiv Kumar, is a "right move at this point of time and would spur demand".

Similarly, Crisil Principal Economist D K Joshi said the fuel price cut would have a benign impact on inflation and will be good for growth.