No room left for another stimulus: Kamal Nath

May 25th, 2009 - 10:14 pm ICT by IANS  

New Delhi, May 25 (IANS) The Congress-led coalition government at the centre may not offer any further fiscal stimulus as the mounting fiscal deficit has left “little room” for more such measures, a senior cabinet minister said here Monday.
“I don’t know whether the fiscal deficit we have has left any room for another stimulus… Fiscal stimulus has become a misnomer these days,” Kamal Nath, whose portfolio in the new United Progressive Alliance (UPA) government will be announced later, said in a panel discussion on CNBC TV.

Kamal Nath was responding to former disinvestment minister Arun Shourie’s comments on the two stimulus packages offered by the UPA government last year to revive the slowing Indian economy.

Shourie said the last two packages offered “little or no” relief to the economy.

“The stimulus has to be more sector, location and firm-specific,” he said, citing the example of the textile city of Tirupur in Tamil Nadu, where job losses continued even after the stimulus packages were announced.

According to Shourie, attracting foreign direct investment (FDI) and “calibrated” disinvestment can only help India in raising funds for its financing the infrastructure development requirements.

Kamal Nath, who served as the commerce and industry minister in the previous government, said the government was keen on disinvesting, but would look at the procedure on individual case basis.

“We cannot have a one size fits all disinvestment policy.”

The minister added that the government would actively consider attracting more FDI by revising policies.

“India already is a very attractive FDI destination. We certainly need to get more capital in the insurance sector (by increasing the FDI cap, which is currently at 49 percent). Civil aviation policy also has to be reformed,” he said.

Kamal Nath, however, ruled out relaxing FDI norms in the banking sector.

He said the government was keen to invest in the infrastructure sector and committed to the social sector schemes, launched in the previous five-year term.

“We have learnt lessons in the last five years. We need to invest in infrastructure now. The government has a clear agenda, we have to act and deliver.”

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