New Delhi, January 4
“The stimulus package vindicates the UPA government’s pledge to secure jobs and ensure economic growth,” Minister of State for Commerce and Industry Ashwani Kumar said. The objective of these two stimulus packages is to boost the economic spirit of the country and reinvigorate hope in the economic growth story. “The immediate requirement was to spur demand which in turn is a function of easy liquidity that is access to capital at reasonable cost,” he said, adding: “The UPA government’s endeavour of about Rs 1,00,000 crore should be spent in the next 100 days in order to lift the economic sentiment.”

“We have an understanding with the top industrial houses to ensure that no large-scale retrenchments will take place. This will allay the fear of the middle and low-income employees vulnerable to the slowdown,” he explained.

Elaborating on the measures, the minister said the government had estimated that nearly Rs 2,00,000 crore of additional liquidity would be brought into the market for the productive sectors of economy. This has been affected by the RBI’s progressive reductions in repo and reverse repo rates and lowering the floor as far as CRR is concerned.

While elaborating how the infusion of funds into productive sectors would enable the economy to generate more activity, Ashwani Kumar said the intent behind taking the step was to divert them into growth generating sector and prevent them from going into savings. Giving an example, the minister said: “Like easing external commercial borrowing (ECB) norms for construction, housing and real estate sector will help protect 30 million jobs and will also spur demand in other related sectors of the economy namely cement, steel and metal.”

Another example of spending that could spur growth was introducing a facility for modernising the public transport system wherein a one-time grant would be provided for nearly 40,000 buses, he said, adding: “This will enable sectors like steel, highways and commercial vehicle industry to gather momentum.”

On the making and designing of the package, the minister said the entire stimulus package had been carefully and minutely configured under the guidance of Prime Minister Manmohan Singh to ensure that sectors of the economy that had the highest weightage in determining individual growth and largest employment been given a boost.

There have been apprehensions about the fiscal deficit by many economists and what long-term impact would it have on the economy. When asked about the same, the minister said: “The effect of the two stimulus packages will increase our fiscal deficit but a conscious decision has been taken to spur growth while moderating inflation.”