Need Third Package To Boost Consumer Confidence - Feb 13, 2009

FICCI on Feb 12 demanded a third stimulus package for the economy claiming that the previous two have not produced the desired result. Rajeev Chandrasekhar, FICCI President said that the next stimulus package should be aimed at giving a boost to the demand in the economy.

"The two stimulus packages announced have not worked. One more stimulus package is required. The third stimulus package should be aimed at restoring consumer confidence," he told reporters.

The government in the first package, which was announced on December 7 had brought down the CENVAT rate by 4 per cent in all sectors except in petroleum. Along with this, an additional expenditure plan of up to Rs 20,000 crore was also announced. Besides this, the government had authorized India Infrastructure Finance Company Ltd (IIFCL) to raise Rs 10,000 crore through tax-free bonds by March 2009 and said it would be permitted to raise further resources.

On the other hand, te government in the second package, which was announced on January 2 that includes higher public spending and easier credit especially for exports, housing and small industries, and special attention was paid to auto and infrastructure sectors.

Infrastructure Firms Are In A Tight Spot Is Working - Nov 20, 2008

Mumbai: With dollars having dried up due to the global credit crunch and infrastructure firms are in a tight spot, RBI is now working on a package for this sector. India desperately needs better roads, improved power supply and bigger ports but infrastructure companies being in mayhem as liquidity dried up due to global crunch. There seems to be no clear end in sight to the global credit crunch, the infrastructure companies, which have large long-term financing needs, have taken a significant hit.

However, at the same time, a slackening growth in the core sector demands a greater focus on infrastructure spending. Some believe that although India may not have the room for a large fiscal package like China, even a smaller dollar boost may help stimulate demand.

According to sources, the Central Bank may carve out a 10 billion dollar fund from its forex reserve and route it through a SPV or a nodal agency like IIFCL. This money would then be lent to infrastructure companies as an unsecured loan with strict restrictions on end use and the tenor of loan. However. Even as RBI continues to debate on the pros and cons of the plan, experts opine that the timing is perfect to spur infrastructure growth.