Prime Minister’s economic advisory panel has said there was no need for any stimulus package to help the industry tide over the impact of the crisis following downgrade of the U.S. credit rating by Standard and Poor’s.
“I don’t think industry needs any fiscal stimulus,” PMEAC chairman C. Rangarajan told PTI, when asked whether fiscal incentives would be needed to help the industry to combat the impact of the global crisis.
Echoing similar views, Yes Bank President and Chief Economist Shubhada M. Rao said, “The U.S. downgrade is not expected to impact Indian industries in a significant manner,” adding, “as such, we do not expect the government to consider doling out any fiscal stimulus package for the industry”.
Industry, however, have started clamour for stimulus to deal with the fallout of the global financial crisis following lowering of the sovereign rating to AA+ from AAA by Standard and Poor’s.
“A slow pace of recovery in the US could also prompt hard hit sectors in India to call for another stimulus package by the government to boost investments and demand”, said Assocham Secretary General D.S. Rawat.
Finance Minister Pranab Mukherjee, while asserting that India’s fundamentals were strong, had on Monday said the “government will focus on encouraging greater domestic consumption and give impetus to the drivers of domestic growth”.
The government in 2008 and 2009 had provided a stimulus package of Rs 1.86 lakh crore to the industry to combat the impact of the global financial meltdown followed by collapse of America’s iconic investment banker Lehman Brothers.
The incentives did help the country to improve economic growth to 8 per cent in 2009-10 from 6.8 per cent during a year ago. India economy was growing by over 9 per cent before the financial crisis hit the world.