Rate cut, interest subsidy stimulus likely
A major fiscal and monetary stimulus package is on the anvil to stimulate the economy and revive growth.business Updated: Dec 03, 2008 20:57 IST
A major fiscal and monetary stimulus package is on the anvil to stimulate the economy and revive growth. Planned measures include a two per cent interest rate subsidy for the embattled export sector, a reduction in Reserve Bank’s benchmark lending rate , and an excise duty cut in commercial vehicles, government sources said.
The said the interest rate subsidy could be announced for exporters who have been stung by a shrinking demand for their products as the US, their prime market, slipped into a recession.
The country’s exports contracted by 15 per cent October, the first time in any month in five years, and is likely to miss the $200 billion target for 2008-09.
Plans are afoot to provide additional funds of about Rs 50,000 crore through India Infrastructure Finance Corporation Limited (IIFCL), an agency championed by the government as part of its ambitious drive for growth.
Similar refinance windows of over Rs 1,000 crore each are also planned through National Housing Bank (NHB) and Small Industries Development Bank of India (SIDBI).