Stimulus package...the second coming

The Government announced the second round of its fiscal stimulus package to bolster India's economic growth amid a deepening gloom across the world in the wake of the worst financial crisis since the Great Depression. The Centre said that it was closely monitoring its spending to expedite the pace of expenditure for all schemes and programmes. The Government said it will set up a fast track monitoring committee to ensure expeditious approval and implementation of central projects. Chief Ministers are being advised to do the same.

The new measures outlined, taken together with steps taken earlier constitute a substantial counter-cyclical stimulus in the current year, the Government said, adding that it does not envisage any further measures in the current fiscal year. However, the Centre said that it is aware that the measures required to provide a stimulus to the economy have to extend beyond the current financial year. Towards this end, it is finalising Plan and Non-Plan expenditure that will be required in the next financial year to maintain the tempo.

The Plan for the next year will include proposals for recapitalization of the public sector banks. The recapitalization is expected to be of the order of Rs200bn over the next two years. This will help to ensure that the banking system will not suffer from capital adequacy constraints in order to provide credit growth needed to sustain the economic momentum in 2009-10, the Government said.