India Mulls Third Stimulus Package in February
Jan. 20 – Inflation rates which have fallen by more than 50 percent since October last year have boosted the government exchequer encouraging the state to reveal a third stimulus package.
On Monday, commerce and industry minister Kamal Nath announced that the government was likely to introduce a third stimulus package in February. "The government will continue to inject adequate funds and will continuously provide stimulus to the domestic demand-driven economy,'' the minister told the Times of India.
India released her first stimulus package in early December when it announced an increased planned expenditure of US$4.1 billion and cuts in excise duties and interest rates. The aim at the time was to boost the ailing infrastructure, textiles and small sale industries.
The second stimulus package cut policy interest rates, eased borrowing norms for various vital sectors such as infrastructure, finance and real estate companies and increased the foreign-investment limit in rupee corporate bonds to US$15 billion from US$6 billion.
Besides pumping additional money into strategic sectors, the Indian government plans to revive the economy through increased domestic consumption. The government plans to increase liquidity in the market by further dropping interest rates and attracting additional FDI. Since October 2008, interest rates have fallen by up to 1.5 percentage points and April to December FDI inflows more than doubled from a year ago to US$18.7 billion.