Stimulus Package 2 – Highlights

The Government is committed to taking steps for minimizing the impact of the global financial crisis on the Indian economy. To this end, Government has taken a number of steps since October 7, the most recent being the measures announced on 7.12.2008. These included:

(i) Additional plan expenditure upto Rs. 20,000 cr. in the current year mainly for critical rural, infrastructure and social security schemes such as Pradhan Mantri Gram Sadak Yojana (PMGSY), Jawaharlal Nehru National Urban Renewal Mission (JNNURM), National Rural Employment Guarantee Scheme (NREGS), Indira Awas Yojana, Accelerated Irrigation Benefit Programme and National Social Assistance Programme (NSAP).

(ii) An across-the-board cut of 4% in ad-valorem Cenvat rate except for petroleum products.

(iii) Several other measures to support exports, housing, Micro, Small & Medium Enterprises (MSME) and textile sectors.

(iv) Authorising India Infrastructure Finance Company Limited (IIFCL) to raise Rs. 10,000 cr. to refinance bank lending for infrastructure projects.

Subsequently, other measures have also been taken such as removal of ban on export of cement.

2. Additional steps are being taken on the monetary, credit and fiscal front to further strengthen the contra-cyclical stance of policy. The Reserve Bank has on Friday announced a set of measures. In addition, with a view to further liberalizing the policy on External Commercial Borrowing (ECB), the Government and the RBI have decided:

(a) The 'all-in-cost' ceilings on such borrowing would be removed, under the approval route of RBI;

(b) To facilitate access to funds for the housing sector, the 'development of integrated townships' would be permitted as an eligible end-use of the ECB, under the approval route of RBI;

... contd.