States asked to push infrastructure schemes to spur growthJanuary 31st, 2009 - 8:09 pm ICT by IANS
New Delhi, Jan 31 (IANS) With two fiscal stimulus packages in the backdrop, the central government Saturday urged states to hasten the implementation of all public expenditure programmes, especially for infrastructure, to cushion the impact of global meltdown on the Indian economy.Cabinet Secretary K.M. Chandrasekhar, along with chief secretaries of state governments and top officials of key economic ministries, took stock of the progress being made in executing various measures announced over the past two months.
During the meeting, Chandrasekhar made three specific requests: Focus on large-scale housing projects, meet with banks regularly to ensure flow of credit to industry and ask state-run units not to withhold payments to small and medium enterprises.
He said special attention should be paid towards the implementation of various schemes in the state, as the centre can only provide funds and that expenditure has to be through the states.
“It is very important that the speed of expenditure should be increased,” the cabinet secretary said, referring to the two sets of stimulus packages and the measures taken by the central bank to ease liquidity in the system.
The first package unveiled Dec 7 called for additional government spending worth $4 billion in the remaining months of the fiscal to spur growth, while cutting value added tax across the board by four percent.
The second Jan 2 provided access to Rs.30,000 crore (Rs.300 billion) worth of tax-free bonds to India Infrastructure Finance Co, and called for a holding to provide credit worth Rs.25,000 crore (Rs.250 billion) to non-banning finance companies.
This apart, the reserve bank also central bank has also intervened at regular intervals since September last year, resulting in the injection of additional liquidity worth Rs.3.88 trillion (Rs.388,000 crore/$77.5 billion).
Saturday’s meeting was also held against the backdrop of Prime Minister Manmohan Singh writing to all chief ministers, just ahead of his hospitalisation for a heart surgery, seeking their support in implementing the stimulus packages.
Several agencies and institutions, including the Reserve Bank of India (RBI) have lowered India’s economic growth forecast in recent weeks, with some predictions even warning the the expansion could fall to as low as 5.1 percent, against 9.1 percent last fiscal.
In fact, India’s industrial production - that has been powering the country’s growth, registered a fall in October for the first time in 15 years on account of the slowdown, and managed to rise by just 2.4 percent the next month.
Similarly, the country’s merchandise exports also shrank 12 percent in October, forcing the government to concede that the target of $200 billion for the fiscal would remain unmet to settle at around $170 billion.